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Should I Buy or Rent?

Buy Versus Rent

The biggest question those considering homeownership need to answer is simple: Should I buy or rent my home? Here is a look at the pros and cons of each.

Buying

Pros:

  • Your monthly payment builds equity, or ownership, of the actual physical property. After years of paying your mortgage, you will own your home free and clear. If you make improvements or your neighborhood improves, you enjoy the benefits of your home’s increased value.
  • With a fixed-rate mortgage, your monthly payment will remain the same for the duration of your loan, less small adjustments for changes in taxes or insurance.
  • The interest that you pay on your mortgage is tax-deductible. There may be other tax benefits in your individual situation.

Cons:

  • Most lenders require that you have a down payment, anywhere between 3.5% and 20%. There are some circumstances that do not require a down payment, but you will need to meet other criteria. Putting down a smaller down payment will mean that your monthly mortgage costs are higher.
  • You are responsible for all maintenance and repairs, as well as property upkeep. Depending on the age, condition, and size of your home, these costs can add up quickly.
  • If you want or need to move, you will need to decide what to do with your home. You can rent it out to someone else or sell it. Either way, it will take time and attention beyond just packing up your moving boxes.

Renting

Pros:

  • You do not need a sizeable down payment to move in. Most security deposits are around one or two months of rent.
  • Someone else is responsible for maintenance and repair costs beyond small things. These will be specified in your lease agreement.
  • If you want or need to move, all you need to do is wait for your lease to expire or break your lease (which may come with financial penalties).

Cons:

  • Your monthly rent payment goes to someone else who owns the property. At the end of your lease, you do not own any stake in the physical property.
  • Your rent can go up over time, based on the fair market rent in your area and any improvements that have been done to the property.
  • Rent is not tax deductible like mortgage interest. Few, if any, renter’s expenses come with tax benefits.

You will need to consider your individual situation to decide which path is right for you. If you are moving to a new area but want time to find just the right home, renting for a short time may free up some money and time to assist in your home search. You can also gain insider knowledge to the local housing market. If your ultimate goal is homeownership, buying now or renting now can both be good options on your path.

Carrie Hansen

Carrie loves people and numbers! Carrie has worked in financial services since she graduated from Iowa State with a degree in Finance. She enjoys connecting with new people and developing relationships to foster business and promoting other people. She is an active runner, golfer, enjoys reading, traveling, family, friends, meme sharing, comedy, anything Warren Buffett related and following the markets and investing. Carrie is happiest surrounded by family and dear friends including her boyfriend Mike and his two children most likely laughing or telling stories .

Carrie is also an adult living with Cystic Fibrosis – diagnosed when she was three months old. Cystic fibrosis is a progressive, genetic disease that causes persistent lung infections and limits the ability to breathe over time.

In people with CF, mutations in the cystic fibrosis transmembrane conductance regulator (CFTR) gene cause the CFTR protein to become dysfunctional. When the protein is not working correctly, it’s unable to help move chloride — a component of salt — to the cell surface. Without the chloride to attract water to the cell surface, the mucus in various organs becomes thick and sticky. In the lungs, the mucus clogs the airways and traps germs, like bacteria, leading to infections, inflammation, respiratory failure, and other complications. For every loan I close with Clear Mortgage, I will be donating $200 to the Cystic Fibrosis Foundation, Iowa Chapter. Reach out and apply now!

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