There has been a quote circulating around from self made millionaire David Bach. It reads, “If millennials don’t buy a home, their chances of actually having any wealth in this country are little to none. The average homeowner to this day is 38 times wealthier than a renter”. This statement got me thinking about the pros and cons of both renting and buying a home. If buying a home is so valuable, then why are some people still choosing to rent? As I made my list and researched the pros and cons, it became pretty clear which option had greater value.
Pros: When you rent an apartment or home it has been found that utility prices for renters can be significantly lower than those who may own a home. Those who rent a home are advised to get renter’s insurance. The average cost of renter’s insurance is about $12/month, this is significantly lower than the amount you would have to pay for homeowner’s insurance. Another benefit of renting is the ability to downsize when needed. If you find you are pinching pennies to get by, as soon as your lease ends you have the ability to downsize whereas, if you are a homeowner you are locked in.
Cons: When you rent you are usually unable to make changes in decoration or other aspects of the home. Perhaps the biggest con, financially, is you are unable to build any equity from renting. In some cases you may have no control over rent fluctuation, last minute changes in your contract, or cancellation. Lastly, you may be in close proximity with your neighbors who may not be on the same schedule as you so there may be noise conflictions.
Pros: By no longer renting a home, you are contributing to your own mortgage payments and not someone else’s. Although the market fluctuates, the price of real estate has been increasing yearly. Buying real estate is one of the safest long-term investments you can make. Another great thing about buying a home is the privacy and independence gained from owning your own home.
Cons: When you buy a home you take on a responsibility to pay for other things you may not have to pay for as a renter. These fees may include things such as loan interests, property taxes, and insurance. Home maintenance and repair costs are also included in these fees. Usually a sizable down payment is needed.
The choice whether to rent or buy your own home is a personal one. Before making any big decisions, review each option and make the final decision that is right for you and your family. To me, the pros of buying a home outweigh those of renting. The difference in renter’s versus homeowner’s insurance is fairly negligible. Provided someone is in the right place to buy, usually owning a home is the right choice to make.
10 Pros and Cons to Renting vs Buying. (n.d.). Retrieved January 26, 2017, from https://www.sundaybell.com/classroom/10-pros-and-cons-to-renting-vs-buying/
9 Reasons to Buy https://www.bigwhitepropertygroup.com/buying-and-selling/9-reasons-to-buy/