Research has uncovered that there are more people renting in the U.S. than at any point in the last half-century or so. The total number of U.S. households that were renters grew by 7.6 million between 2006 and 2016, but there are still more homeowners overall as Pew Research Center reports.
So how do you know what’s right for you? While many dream of owning a home, in many situations renting may be the better option. Both come with multiple benefits that can help you answer the question, “Should I rent or buy a house?”
Benefits of Renting
Freedom. When you rent, you have a lot more freedom when it comes to how long you’ll have to stay. If you need to move for a job, for a new love, or what have you, you won’t have to try and sell your home quickly, and potentially end up taking a big financial hit. All you’ll probably have to do is give 30 days notice to your landlord. If you’ve agreed to rent for six months or a year, you may need to find someone to take over the lease or pay the remaining months, but that’s usually a lot less than what you’d have to pay if you couldn’t sell your home and were forced to pay a mortgage plus a rent payment.
A Set Monthly Cost. When you own a home, there may be unexpected repairs from a leaky roof to a hot water heater explosion and everything in between. When you’re renting, your landlord will have to take care of that bill – you know exactly what your monthly rent is, and other than utilities you probably won’t have to worry about any other major costs.
Lower Upfront Costs. If you purchase a home you’ll have to come up with a big down payment, pay the closing costs, and other fees – typically this adds up to tens of thousands of dollars. When you rent, the most you’ll probably have to pay is the first and last month’s rent plus a deposit to cover any potential damages.
More Flexibility. Homeowners are restricted to buying in communities in which they can afford to purchase. For example, buying a house in a big city may be out of reach to most would-be homebuyers, whereas it can be doable for some renters. While the monthly rent is likely to be higher than in other areas, renters are much more likely to find something that will work as compared to homebuyers.
Benefits of Buying a Home
Building equity. When you pay your monthly rent, it’s going straight into your landlord’s pocket, but when you’re a homeowner, your mortgage payment goes toward building equity, making your home an investment as well as a place to call home.
Savings at Tax Time. When you make rent payments, you generally don’t get a deduction on your taxes. But with a mortgage, there are multiple tax breaks that can save you at tax time, including deductions on property taxes and mortgage interest.You Can Make it Your Own. As a homeowner, you can do what you wish as far as making renovations, painting, or even owning a pet. As a renter, you’re restricted to your landlord’s rules.