Is Owning Your Home Always Better than Renting?

While owning your home has many advantages, sometimes renting is a better choice then owning. Here are a few examples to explain the difference.

At the right time owning your own home can be a great pleasure. Many people find themselves more motivated to improve places they own. In your own home you are free to enjoy the house and yard exactly the way you like it. In addition, owning property offers tax deductions. Plus, every payment on a mortgage is a step towards owning the home outright.
On the other hand, if a buyer stretches him or herself too thin to buy a house, or if a buyer is not happy with the house and/or location, owning a home can be more of a chore and less of a pleasure.

If you are considering buying a home for the first time, or moving to a house or condo that suites you better than the one you are in, there are three important questions to ask.
  1. In the price range I can afford, are there properties available on the market that would meet my needs and expectations?
  2. Will the mortgage payment, plus taxes, insurance, utilities and maintenance be 30% or less of my take home income?
  3. Do I plan to live here for at least 5 – 7 years? (Fewer years in a rising market, more years in a declining or stable market).
If you answer all three questions “Yes!” then you should feel great about pursuing the possibility of owning your own home.

Renting can be better than owning under several circumstances, some of which include:
  1. You cannot afford to buy what you need and want in your required location.
    In that case, make a savings plan so one day you will be able to buy in your neighborhood or one you like as much or better.
  2. You are in a location only temporarily.
    One exception would be if you knew you could get rent in excess of your costs, and that the home would be easy to rent and manage from your next location.
  3. You have a better place for your money.
    With all of the financial advantages of owning a home, it is not the only or always the best way to invest your money. If you have investment goals and limited capital, it may make sense to rent for a while depending on the other investment opportunities available to you.
In summary, both owning a home and renting can be the right choice depending on your circumstances, needs and desires.