Rent vs. Buy: Compare the Pros & Cons of Each
Explore the benefits of buying a home and the benefits of renting
You're starting to settle down, you have a good job and you're thinking about starting a family. Maybe you're tired of not being able to decorate your apartment the way you want to or wish you could make repairs and renovations without waiting on the super. Now's the time to explore the benefits of buying a home, learn the steps you'll have to take, and compare them to the benefits of renting a house or apartment.
The benefits of renting a house or apartment
Sometimes it seems like the hassles of renting outweigh the benefits, but there are some great reasons to rent.
- Build your credit. One of the considerations when buying a home is your credit score, and renting gives you the opportunity to increase it by paying rent and insurance on time.
- Pay lower utilities. Usually landlords cover the cost of water and waste disposal, and sometimes even heat, but when you own your home you're responsible for these costs yourself.
- Enjoy lower monthly payments. When you are renting, you don't have to pay property taxes, and renter's insurance is not very expensive.
- Avoid maintenance responsibilities. Even if you don't like waiting for the super or handyman to fix a problem, sometimes it's nice to have someone on hand who knows how to handle maintenance issues and won't charge you for repairs.
- Share costs with a roommate. When you have an apartment, you can share rent and utilities with a roommate and significantly lower your monthly costs. Sharing a house with a roommate gets more complicated due to the legal elements of home ownership and loan paperwork.
Benefits of buying a home of your own
When you're deciding to rent vs. buy a home, you'll want to take a good look at some home ownership benefits before you make your final decision.
- Build equity. When you make mortgage payments, you are building up equity, which is the portion of your property you actually own. Eventually, you can borrow against your equity to obtain loans or lines of credit to help with home improvements, emergencies or other big investments. When you pay rent, you get no financial return on your investment.
- Take advantage of possible tax breaks. As a homeowner, you may be eligible for tax breaks because interest paid on a mortgage is usually tax deductible. Consult your tax advisor or visit the IRS website to determine eligibility. Learn more about home tax benefits.
- Discover security & freedom. Buying a home allows you more stability and freedom to plan for the future. You won't be subject to rent raises or changes to the property that are out of your control. Plus, if you've purchased a home, you probably plan to stay where you are for some time, which can make long-term decisions related to employment and schooling easier.
- Renovate your home according to your tastes. One of the benefits of buying a home is that you can renovate, design and decorate it however you want: Decide if you want to paint or paper, pick a stucco or smooth finish, lay tile or install hardwood floors.
- Position yourself for the benefits of appreciation. Buying a home has historically been considered a steady investment and should generally appreciate with the rate of inflation. You could get a higher rate of return the longer you're in a house, especially if you're making substantial improvements as you go along. Even if you fall on hard times, you can often leverage your house and protect your other finances, which is a lot better than being evicted when you can't make rent.
Learn more about mortgages and buying a home with Citizens Bank
Renting has its benefits, especially for people who don't plan to stay in one place too long. But, if you plan to stay put, the financial benefits of buying a home certainly make a lot of sense. Explore your mortgage options as well as the HomeBuyer Savings program or talk to a Citizens Bank home loan originator and start the process of getting preapproved for a mortgage at 1-888-514-2300.