Buying Versus Renting

Renting or Buying:
Advantages and Disadvantages

If you are considering buying a house, one of the first decisions you need to make is whether buying a house instead of renting one is the right direction for you. Since owning a home is the "American Dream", many people simply assume that it's always to their advantage to buy a home, and for most, it is. Take a moment to review the following table to see how your situation fits in. Items in the green boxes are advantages and in the red boxes are disadvantages.

Renting		Buying
*Advantages*		*Disadvantages*
More fixed costs for the term of the lease		Variable costs
Not gaining equity, but not losing it either		Equity may go up, down, or stay stagnant
When the lease is up, you can just move		If you want to move, home generally must be sold
There is generally less work in maintaining a home or apartment		Work needs to be done by you--or paid for by you
Smaller amount of "up-front" cash		Generally a larger initial investment--the downpayment
Disadvantages		Advantages
No matter what happens with the value of the home, you will never gain equity		Over time, the mortgage balance decreases and equity builds, even if the value of the home does not increase
Limited--or no--ability to personalize your living quarters		The ability to remodel and redecorate the home to match your needs and desires
No tax advantage to renting. Your landlord gets any and all tax breaks that are available		There can be tax advantages attached to home ownership. Consult competant legal and/or accounting advice for details for your situation

Feel that buying a house is the right route for you? Start by reviewing the checklist