Rent vs. Buy: What's right for you?
Ask anyone and most will tell you they desire to own a home rather than rent. But how do you know if homeownership is actually right for you? Here are a few things to consider while weighing the pros and cons of owning a home.
Owning a home is a great way to build wealth.
On average, the net worth of a homeowner is greater than the net worth of a renter. In 2016, the average homeowner's net worth was $231,420; the average net worth of a renter was only $5,200. Owning a home is a great way to build wealth and financial security but it takes time to do so.
However, purchasing a home is not an automatic ticket to greener pastures.
Let’s put aside the financial side of things and consider if owning a home will actually make you happier. There’s a lot of burdens that come from being a homeowner. When you rent a home, you don’t have to worry about things like fixing the water heater, replacing the roof, and many other maintenance and upkeep tasks that come along with owning a home.
The expenses of being a homeowner go well beyond the mortgage payment - something to consider before owning your own home.
Renting can provide flexibility.
There’s one undeniable benefit that comes from renting a home rather than owning one - flexibility. It’s much easier for a renter to live a mobile lifestyle rather than a homeowner. This means if there’s something you don’t like about your home or you get a job offer on another side of the country, you’re free to move.
But that flexibility comes with a cost. Rent prices are on the rise, especially in trendier neighborhoods that have seen a significant rise in rental prices. However, if you own a home (with a fixed-rate mortgage) you're shielded from price spikes, inflation and other factors that could affect your mortgage payment.
Think you need a big down payment? Think again.
Let’s debunk this myth of the “20% down payment” - it’s just not the standard. The average homeowner typically puts down 5% of the total cost of the home. In fact, there’s plenty of programs and mortgage for first-time homeowners offering even lower down payments.
Being a homeowner can provide a sense of security.
And that can be priceless. The sense of both accomplishment and security that comes with owning a home is one of the most satisfying things about being a homeowner.