Renting vs Buying: The True Cost
Deciding whether to rent or buy a home is a complicated dilemma. There are several factors that should go into the decision, and it’s not one to be taken lightly. That being said, if you plan on living in the same place for a while and have the financial means to purchase a home, then it’s probably in your best interest to buy.
People often rent because they misguidedly feel like renting gives them the financial freedom that a 30-year mortgage does not. While you won’t have the commitment of a long-term mortgage if you rent, you also won’t build equity or have the freedom that comes from owning your own property.
Whether you decide to rent or buy, you’re still paying someone’s mortgage. Why not make it your own and invest in your future?
Your rent is really just your landlord’s mortgage (plus profit), so you’re helping him or her build equity instead of building it for yourself. At the end of your lease, you’ll have spent thousands of dollars on a property with nothing to show for it.
Long-term, owning a home typically ends up being cheaper than renting for the same amount of time, especially if you live in a popular location. With a fixed-rate mortgage, the price of your monthly payment won’t raise every year. If you’re a renter, you’re almost guaranteed to have a rent hike every time you renew your lease.
If you aren’t sure if you’ll stay in your area long-term or if you don’t have enough money saved for an adequate down payment, renting might still be the best option for you. It’s important to do that math either way.
If you haven’t considered homeownership because you think it’s cheaper to rent, you could be missing out on an opportunity to own your own property, save money, build equity, and make a better future for yourself.