Everyone needs some type of shelter. Whether it's an apartment or a house, people need a place to go after work where they can feel safe and secure. Having a spouse and children adds to the need for a place to call home.

One of the main decisions you must make after you decide where to live is whether you should rent or buy a home. Both options have pros and cons. There's no right option for every situation. However, there are major financial consequences to your decision.

Renting a Home

Most people start out renting an apartment or house once they move out of their parents' home. Renting is usually considered a much safer financial option than buying. Benefits of renting a home instead of buying include:

  • Lower initial costs
  • Lower monthly payment
  • No property taxes
  • Flexibility in moving
  • Lower repair costs

Buying a Home

It's considered the American dream to own your own home. There's great satisfaction in raising your family in a home that belongs to you. Benefits of buying a home instead of renting include:

  • Equity in your home increases over time
  • Can decorate and remodel your home the way you want
  • Tax advantages to home ownership
  • Personal satisfaction in owning your home

Should I Rent or Buy a Home?

You'll have to examine your financial and lifestyle situation to determine whether you should rent or buy a home. Renting is usually cheaper in the short term, but buying maybe cheaper in the long run. After your mortgage is paid off, you'll own your home without having to make any more payments. It's a long-term investment. If you leased during this time, you wouldn't have any ownership interest in a home.

However, it's not always better to buy. Your monthly payments will be much cheaper if you rent. You can take the savings and invest it to make more money. If you want to move after you buy, you'll have to sell the house, which isn't always easy. Also, home prices could drop in the future. The home you buy now may be worth much less in the future.

You might consider renting instead of buying if:

  • You can't afford the down payment
  • You can't afford high monthly payments
  • You have bad credit and can't get a loan
  • You don't plan on living there long
  • You plan on moving multiple times during your life
  • You can invest the money you save elsewhere
  • You don't want to be responsible for repairs to the home

Do you believe you're ready for the greater responsibility of owning a home? You might consider buying instead of renting if:

  • You can afford the down payment
  • You can afford higher monthly payments
  • You have good credit and can get a loan
  • The interest rates are low
  • You don't mind being responsible for repairs and maintenance
  • You don't plan on moving for a long time
  • You plan on remodeling and redecorating your home
  • You want the feeling of stability, security and community that comes with home ownership

Questions for Your Attorney

  • Are there any disadvantages to mortgages that require no money down?
  • What do I do if my landlord doesn't fix major problems in my rented house? Can I withhold my monthly rent payment until they're fixed?
  • I have the option to rent or buy the same house. How long do I have to live in the house to make it worth it to buy instead of rent?