When deciding whether to rent or buy it’s important to carefully evaluate how you want to live and how much you can afford. For many, renting is the right decision. About one-third of America’s families rent today, both by choice and because of financial ability. Is renting right for you? Knowing what to expect can help you make an informed decision.
For many, renting is the ideal choice. Here’s why:
- Freedom from maintenance. If you like the idea of having someone else handle the larger home maintenance issues, then renting may be right for you.
- Flexibility. You can move relatively quickly and easily when you rent. You may only have to give one or two months of advance notice to your landlord about moving, especially if you are renting month-to-month.
- Protection from house price declines. If home values decline you won’t lose equity or run the risk of owing more on your mortgage than your home is worth.
- Living in high-cost areas. Renting may make sense if you want to live in the city or other high-cost area where it’s expensive to buy.
- Sense of community. Many renters say that they appreciate the sense of community that comes with some rental communities.
Crunch the numbers. Use our Rent vs. Buy calculator to explore whether renting or buying is right for you.
Renting does have drawbacks, such as:
- Less stability. Unless there is rent control, your landlord can increase the rent each year. Also, your landlord may not renew your lease, leaving you little time to find another place to live and arrange to move.
- Limited ability to personalize your home. You’ll need to ask permission to do things like paint the walls and you may be required to pay for it to be repainted to a neutral color when you leave.
- Limited ability to make improvements. Your landlord is required to keep things in good working order. That doesn’t mean changing out laminate countertops to the new granite countertops that you have your heart set on.
- No opportunity to build equity. When you rent there is no opportunity to build equity over time that generally comes with owning a home.
- No tax benefits. When you rent you won’t be able to take advantage of potential tax deductions for mortgage interest.
- Can be difficult to rent with a pet. Even if you do find a rental property that allows pets, there will likely be costs associated with having one.