Renting vs. buying: Advantages and disadvantages of renting vs. owning a home
Advantages and disadvantages of renting vs. owning a home.
Renting a house or apartment
One variable that may be an advantage when renting is leasing flexibility. Being able to choose the term of your lease may be beneficial for you. If your circumstances are fluid, a month-to–month lease gives you the option to move on short notice. By renting you eliminate the cost of repairs as they are the responsibility of the landlord. Renting may also be more suitable if you are on a budget. Rent can be significantly less than a mortgage because renter’s insurance is cheaper than homeowner’s insurance and there is no property tax.
One disadvantage as a renter is that you are subject to the owner’s rules. These rules may include no pets and limitations on home décor. You are also subject to the quality in which the owner cares for the property, which may result in a living situation you consider unpleasant. The greatest disadvantage for renters is there is zero return on your investment for rent payments.
Owning your own home
One benefit of homeownership is you have the ability to do whatever you want without getting consent from a landlord. There are also many tax deductions if you own a home like deducting interest paid and property taxes. Owning a home can be a smart investments and can improve your credit rating. Lastly, owning a home can offer the stability of knowing where you will be living. For some, putting down roots and having a sense of ownership is important.
Buying a house can put a considerable strain on your finances. Typically, you can expect to pay more for housing during the first several years as a homebuyer than you did as a renter. Even if your mortgage payments are less than you paid previously per month in rent, you must also pay property taxes, homeowners insurance, utilities and upkeep expenses.
Michigan State University Extension offers financial management and home ownership education classes. For more information of classes in your area visit the MSU Extension events page or MI Money Health.