Thursday, September 15, 2011

When it comes to finding a home, is it better to rent or to buy?

*Please enjoy this guest post by Les from; who writes about all things finance including savings, loans and credit cards. *

Whether you are moving out from mom and dad's house or you are just trying to weigh up your options, you may be deciding between buying and renting. While looking at a mortgage calculator can help you make your decision, there are plenty of other things to consider. Adding numbers to the mortgage calculator will let you know just how much money you need.

Advantages to Owning a Home

When you put money down and continue to make payments on your mortgage you "own" your own home. For some people just the mere thought of this is enough to keep them moving towards this goal. It gives people a sense of pride and makes them feel a sense of accomplishment.

Homeownership is also important financially. Each payment that you make gets you closer to owning your home outright. This is almost like stashing money away for yourself. When the home is paid off you can sell it and, in theory, get some of the money back that you have been paying.

When tax time comes it can benefit you to have a home. The interest that you pay on your mortgage can be a deduction on your income taxes. While this isn't usually a life-changing amount, it is a side benefit that you may not have realized.

Disadvantages to Owning a Home

If you ask US homeowners right now, you will get a list of disadvantages to owning your own home. With the market in shambles, many people now realize that they are never going to get the money they put into their homes back again. They owe more than the home is worth and there is no way to recover the funds.

It can be expensive to own a home. Aside from the mortgage, the home needs to be insured and if you didn't pay enough of a down payment at the beginning, you are probably paying PMI as well. Then there are the taxes that are due.

Advantages to Renting

Right now, one of the biggest advantages to renting is the lack of obligation. While you usually sign a lease, it is in no way as binding as a mortgage. You can wait a few months and upgrade, move to a better part of town, or even move in with a friend without worrying about what you are leaving behind. It makes you more mobile and lessens the amount of roots that you need to put down.

When something goes wrong with your home or apartment there is someone else that needs to take care of the problem. When the air conditioning goes out, the landlord is the person footing the bill. When you can't seem to get the heater to run correctly, the call to the maintenance person isn't paid for by you.

Disadvantages to Renting

While you may be paying less than a mortgage payment and you aren't handling all of the cost yourself, there is one problem with the money that you are paying. It is going into someone else's pocket. You are paying off their mortgage. You aren't tucking money away for yourself. You own nothing. It is someone else's property and they are benefiting from your rent payments.

Considering Buying?

If you do want to buy a house a mortgage calculator can help give you an idea of how much it will cost. You can compare this to what you are paying for rent. Remember that there are some added costs that you may not be used to paying.

You can also use a mortgage calculator to figure out how much of a down payment you will need. You can change these numbers to see how it will affect your house payment and how much you are going to owe overall.

***Mysti's Note:  Please remember that there is more to owning a home than the mortgage.  Taxes, maintenance, home improvement.  Take all of this into consideration when you are making your decision.***


  1. After renting, then buying a home, and now renting from my parents, I can honestly say I HATE homeownership. Something constantly comes up that costs money. It was so nice to be able to call my landlord when something went wrong. Now I have the added bonus of my dad being my landlord, which is a good compromise because I end up paying for the repairs, but usually only half.

    I know a lot of people are fond of saying, "Renting is throwing away money! You never get to own the house!" True, but that also means I can walk away when I feel like it. And I'm not throwing money away because I have a roof over my head during that time.

    Homeownership is a great option for many people, but I doubt I will ever own another home.

  2. I have rented before, and now I own, and I would say that owning is much better for me. Where I live, it costs less to buy then to rent, so if you don't have high maintenance costs, then buying is a win. For instance, my mortgage is $1100, but to rent my house I was told that the going price would be around $1,500. I should just rent out my house!