Rent a Home Vs. Buy a Home

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Homeownership has long been part of the American Dream, but it isn't always all that it's cracked up to be. As the average cost of purchasing a home is over $200,000 as of 2011, according to the U.S. Census, tt's smart to thoroughly think about your options before making such a large purchase.

    Benefits of Homeownership

        When you own your own home, you have control over what you do with it. You can decorate it as you see fit or own a pet, for example, which may not be allowed in a rental. Over the long term, home ownership becomes a financially smart move, since you're building equity in the home. If you live in your home after fully paying your mortgage, you will only be responsible for paying the property taxes, which can be less than the cost of renting. In most cases, you'll have more privacy when you own your home, particularly if you have a lot of land to go with the home.

    Benefits of Long-Term Renting

        Homeownership can come with a lot of additional repair costs, especially if you aren't a handy person. Living in a rental home means that you won't have to worry when the bathtub is clogged or the roof starts leaking -- you simply call the landlord and have her fix the problem. In areas where the real estate prices are high, renting may be the only affordable solution for the average worker, an important point if you crave the hustle and bustle of New York City or want to surf the waves on Hawaii's North Shore. Rental units sometimes provide additional benefits, such as on-site fitness facilities or utilities included in the cost of renting.


    The Financial Equation

        In the initial years of paying off your mortgage, the bulk of your monthly payment goes towards interest. If you're only going to stay in that home for a few years, you won't have a lot of equity in the home when you sell. There is a certain point, however, where it becomes less expensive to buy a home than to rent. This amount varies according to the rental and real estate markets in your area, but "The New York Times" states that the average amount of time it takes to reach this point is six years.

    What's Right For You

        Whether you buy a home or rent long-term is a very personal decision. Calculate how much it will cost to own your home, including the monthly mortgage payment, property taxes and other potential expenses to determine whether you can afford it. If not, you're better off renting. You should also determine whether the pride of home ownership outweighs the ease of renting.
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