Choosing a Home: To Rent or To Own?

By  | 

I think we’ve all gotten unsolicited advice about home ownership in our lifetimes.

“If you rent, you’re just throwing money away,” and the like.

Of course, when you’re at the crossroads between continuing to rent or biting the bullet and getting a house, there’s always one major factor to consider: money.

I’ll get to that.  Before I do, I need to lay down other the pros and cons of that big decision.

How long are you planning to live at your new residence? 1 year? 5 years? 50 years?

Of course, a pro of purchasing a home is that you build equity. It’s why property ownership is an “investment.” Eventually you will (hopefully) make money on it. How much you actually get back on your investment is proportionate to how long you live there.

You probably won’t make much equity for the first half of that 15 or 30 year mortgage (unless your area has an insane hike in property appreciation). Here’s a handy calculator to figure out what you could make equity-wise after taxes, insurance, interest, etc.

Yes, it’s possible to make a ton of money on your home if you plan to stay the duration of your mortgage. If you want to move in the next few years, however, be aware that you could lose some serious cash.

Let's be real: losing money in the housing market is a pretty devastating. experience.

Let’s be real: losing money in the housing market is a pretty devastating experience. (via ABC)

Homeowners also qualify for a tax deduction that renters do not. Homeowners also have the luxury of locking in a mortgage payment for 15 to 30 years, and they ultimately benefit from appreciation. This is opposed to renters, who must pay escalating monthly costs driven up by rising property values.

If a renter can find an area with low enough monthly rent, they can invest their money in other places and make up for lost equity. Many people do not consider this.

This brings me to my next point: homeowners can never be sure what their monthly costs will be. You may end up with a leaky roof, plumbing or foundation issues, and that adds up.

Meanwhile, renters have landlords who will handle and pay for repairs. . .as long as they’re in any way a good landlord. This is also good for those of us who aren’t very handy when it comes to repairs around the house.

Now for the fun part: If you rent an apartment or townhouse, you live very close to your neighbors, which can be trying.

Nothing can ruin a good night's sleep like a bad neighbor.

Nothing ruins a good night’s sleep like a bad neighbor.

Are they throwing bowling balls around up there or what? It sounds like they are tap dancing at 3 in the morning! This is something the homeowner doesn’t have to deal with. They also have more creative freedom in their home and can decorate how they like without asking permission (except if you’re part of a homeowner’s association). This is not a huge deal to some, but to others, this is everything!

To a large extent, your decision will come down to your location, the market, your family situation and lifestyle preferences.

Marnie Slater is a freelance writer for Weekend Collective and performs stand up comedy in Kansas City. Follow her @marnieslaterkc for upcoming gigs and a whole lot of shenanigans.

leave a reply