Long before you move and settle in, you must make a decision: is it better for you to rent or buy a house? Renting and buying both offer a variety of benefits and disadvantages. Buying a house is expensive, and it can be difficult to make such a big commitment. According to Business Insider, over 12% of millennials are expecting to always rent a home, largely due to the lack of affordability when it comes to buying a house. However, renting forever is not a smart choice for everyone. Everyone’s situation is unique, and what works for one person may not be the best choice for another. Here are some things to consider when choosing for yourself.

Length of Your Stay

The length of time you plan to stay is very important in making the decision between renting and buying a house. A lot of factors determine how long you stay in one place; job and income stability, family obligations, higher education, work-related travels, and more can all affect whether or not you move around often. Since you are only paying for the time you are staying and typically only committing to one year at a time, it is less difficult and less expensive to rent a space for the short-term. If you see yourself staying in the same place for a long time, it may be worth the time, money, and effort that purchasing a home entails. 

Maintenance Task Responsibility

If you do not have knowledge of handy tasks and find it unrealistic to pay a professional to deal with maintenance issues, you may want to consider renting a space. In rental properties, the owner/landlord is responsible for taking care of any problems; broken appliances, leaky pipes, and any pests are dealt with for you. When you own a home, these issues are all on you (or a professional you hire) to fix.

All the Costs

Finding a place to live is a hefty cost no matter how you go about it. However, the way you pay to rent is very different from the way you pay once you buy a home. 

Upfront Costs 

When you buy a home, your upfront costs include a down payment and any extra fees. In addition to these payments that occur when you commit to a home, you may need to get appliances such as a refrigerator, oven, and laundry machines if you do not already own them. Also, if there are any necessary repairs that must be done before moving in, this will account for additional costs. Renting requires a security deposit upfront, and sometimes extra fees if you have pets or the landlord does not provide free parking. Oftentimes, your landlord or the property owner will supply most of the desired appliances. 

Recurring Costs

When you purchase a house, you pay a mortgage every month, as well as paying for insurance, all utilities, and maintenance costs. Unlike renting, if you stay in the house you own for long enough, you will be able to pay off your mortgage and no longer owe that monthly payment. However, utility services, insurance, property taxes, and maintenance costs will continue. Renters pay their monthly rent as well as any utilities that are not provided. Some landlords require a monthly fee for pets in addition to their own rent. 

Home Equity

Home equity is the monetary gap between what is owed on a house (your remaining mortgage) and how much the house is worth. You are only able to build equity, and potentially make money from a property if you plan to sell or refinance, if you own a house. Equity is a large benefit of home ownership. However, equity is not a guaranteed benefit. If you are unable to update and maintain a house as necessary, you risk that equity dropping and could even lose money. Also, equity is heavily reliant on the real estate market, so it is not always in your control. 

Privacy & Freedom in Your Space

Apartments and rental homes offer a lot less privacy and room for personal choice in many ways. Privacy is limited, especially in larger apartment buildings. Since you do not own the space, interior updates and renovations are typically not up to you. Any significant changes that are desired must be discussed with the landlord/property owner and can be turned down. If you go ahead and make changes, you risk your security deposit. Also, some landlords do not allow pets, so you may be unable to make that decision for yourself if renting. When you purchase a house, you have a lot more privacy since no one else will have keys to the home. Any updates you want to make are limited to your preference and budget since you own the place, and there are no pet restrictions.

There are a variety of sites, including The New York Times and Nerdwallet, that offer a calculator to determine which option is best for you financially. However, money isn’t always the only indicator of what is best; you must weigh the pros and cons for yourself before making a final decision. Take your time and make sure you are really certain before choosing whether to rent or buy a house. 

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