Advantages Of Owning vs Advantages Of Renting

Advantages of Buying Your Home

1.  Control Over Housing Expense

By selecting a fixed-rate 15, 20, or 30 year mortgage, the homeowner has assurance that housing costs will not increase over the period, and will be eliminated at the end of the term (subject to refinancing).

2.  You Build Equity

Some of each monthly mortgage payment goes toward the loan's interest.  Other portions may go to homeowner's insurance and county taxes.  The remainder pays down the loan principal.  Every dollar put toward your loan's principal represents a dollar of equity, actual ownership of the property.  Further, the property should appreciate each year, further adding to equity.  With certain blip periods such as the 2006 housing bubble burst, home prices in the U.S. appreciate nationally at an average annual rate between three and five percent (home value appreciation in different metro areas can appreciate at markedly different rates than the national average).

3.  Improvements Increase Your Home's Value

A homeowner can also increase a home's value through home improvements, thus both making your home more comfortable and enjoyable while growing loan-to-value (LTV) ratio.

4.  Current Mortgage Rates Are Relatively Low

Interest rates rise and fall through the years.  Several years ago, interest rates were higher, and it was more expensive to obtain a mortgage.  Since these costs have been reduced, it is now easier and less expensive to own a house.

5.  Ownership Rights And Creative Freedom

Your decorating and home improvement choices are just that, yours, provided they don't break building codes or violate homeowners' association rules.  You can paint walls any which way, add fixtures, or build a patio or deck.  Changing your environment to suit your whims is a freeing aspect of homeownership.

6.  A Sense Of Belonging To The Community

Homeowners tend to stay in homes for longer than renters and are more likely to grow roots.  They might join a neighborhood association, sponsor block parties or National Nights Out, volunteer at a nearby community center, join a school group, or align with a business improvement district.  Renters might not do any of those things, particularly if they know their lease is up in a year and they might move.

Advantages Of Renting

1.  No Responsibility For Maintenance

Admittedly, this is a big one.  As a renter, you're not responsible for home maintenance or repair costs.  If a toilet backs up, a pipe bursts, or an appliance stops working, you don't have to call an expensive repair person, you just call your landlord.  Renters in condos, townhomes, or apartments do not have lawn and grounds care obligations.

2.  Relocating Is Easier

When renting, relocating for work is easier.  Though a sudden move may require you to break your lease, you can partially offset the cost by subletting your apartment or talking with your landlord.  On the other hand, selling a home takes time and effort.  If you have a short timeline to sell your home, you may be forced to accept a lower price and lose some of your investment.

3.  No Real Estate Market Exposure

Home values fluctuate and can decline over time.  If you're a renter, that's not your problem.  If you're an owner trying to sell, it is.