Renting or Buying a Home: Which Option is Best?

Renting or Buying a Home: Which Option is Best?

Trying to decide between renting or buying a home? Whether you are entering the housing market for the very first time (i.e. Millennials), or just looking to move, this is probably something you’ve been contemplating. When making your decision, it is important to note that the better option will be determined based on your specific situation. Here are a few examples of when it would be better to rent and when it would be better to buy. This guide will assist you in making up your mind.

When It’s Better to Rent


1. Little to No Savings

Purchasing a home will require a down payment, closing costs, as well as a monthly mortgage payment. You will also have to factor in the cost of utilities, furniture for every room, and appliances. Before you begin looking at homes, you should estimate how much you will be able to afford. You do not want to be living paycheck to paycheck just to purchase a home. If you will not have enough funds, renting will be the better option.

2. Unsure About Your Future

If you do not have a concrete plan for your next five years regarding your job, family, or other personal aspects, then you should rent. This way, you have the option to move around when it might be necessary.

When considering your job and its location, you should first think about how long you will remain at that company. If you are unhappy at your current job or simply plan to leave it within the next few years, then renting is probably best.

Additionally, if you are unsure if you will have to relocate for your job, then it would be safer to rent for the time being.

When It’s Better to Buy


1. You Can Actually Afford It

When calculating the approximate costs of purchasing a home, make sure you carefully consider the down payment. Many homes on the housing market today will require a down payment equating to 20 percent of the total cost of the home. To illustrate, if you were to purchase a home costing $250,000, then you would have to pay $50,000 upfront. Furthermore, you will also have to pay closing costs, maintenance fees, and more.

If you have plenty of money saved up, then perhaps you are fit to own a home rather than rent.

2. You Have Long-Term Plans at the Home’s Location

A substantial amount of planning will be essential to deciding between renting or buying a home. Part of this planning involves thinking about your future. Consider your job, your family, and your personal plans, and then ask yourself: Will I be living here for at least five years? If the answer is no, then you will probably want to consider renting. Otherwise, you will not be able to generate a return on your investment in that short of time. If the answer is yes, then owning a home would not only be a great investment, but would also make more sense.

3. The Financial Benefits

One of the biggest perks of purchasing a home is the financial benefits. Interest rates are currently low, which means you would be paying a lower amount on your monthly loan payment. Moreover, “If you itemize your federal return and don’t qualify for the alternative minimum tax, you can deduct your mortgage interest and property taxes from your tax obligations. And most importantly, you can build equity in your home, something that isn’t possible with a rent payment” says Lauren Dowdy of CNBC.

Trust Champion Title & Settlements with Your Title Services

Champion Title is a full-service title insurance agency providing title insurance and closing support to streamline closings and increase compliance for our diverse clientele including home buyers. We fully embrace technology and are proud to offer clients myriad tools and services to efficiently and accurately assist them with all of their closing needs. For more information, contact us today!