Renting vs. Owning a Home

Renting vs. Owning a Home

If you are currently renting a home or apartment, you may imagine owning one as the ideal scenario. Everyone loves the idea of decorating, renovating, and changing their home to suit their individual needs and wants. Nobody dreams of growing up and living in an apartment. However, owning a home is not without its downsides, and some of those downsides are the benefits of renting.

Whether you are thinking about buying a home or renting, this article will give you a closer look at the pros and cons of both options to help you decide what is right for you right now.

Owning a home can be a great investment

When you own a home, you have the opportunity to build up equity in your home. This means that over time, as you make mortgage payments and pay down the principal on your loan, you are increasing the value of your home. When it comes time to sell, you will be able to use that increased equity as collateral for additional loans, such as taking out a second mortgage or borrowing against 401(k) plans before retirement age.

A home is also a safe investment. Rent can fluctuate as markets go up and down, but more times than not, it will only go up. Unless you refinance (which means actually lowering your payment), the mortgage payment will remain the same regardless of what the economy is doing.

Eventually, a mortgage can become very affordable as the dollar is worth less and less. Someone who purchased a 2000 square foot home in 2000 may have a mortgage payment of $900 per month, which back then was a high amount.

Today, you couldn’t find a 600 square foot apartment for that price in many places. Meanwhile, an apartment that was renting for $650 in 2000 may now be asking for $1200.

Taking this approach, home ownership may seem like the most obvious choice, but it comes with some drawbacks.

Owning a home can be quite the commitment

Owning a home can be quite the commitment and first-time homeowners often get caught off guard. You have to cover taxes, insurance, repairs, and maintenance. If you’re lucky enough that nothing goes wrong in your first few years of ownership, you’ll still need to deal with unexpected expenses like these down the road. It is never a question of if the water heater will break down, but when.

Another potential issue is selling a home. If you find yourself in a situation where you need to move, selling a home can be a challenge, particularly if the market is a buyer’s market. There are ways to sell your home, such as using an instant home-buying company, but it comes with fees and will likely leave you selling for less than you’d like.

With renting, if you need to move, there aren’t many issues as long as the contract is finished, or you can find a new tenant to finish it out for you (with the landlord’s permission). If you locked in a payment plan months ago for a lower rate than the current rate, your landlord may even be eager for you to leave and drop all fees related to leaving early.

Renting is often cheaper than owning in some areas

If you’re not sure if you want to stay in one place for a long time, renting might be the best way to go. Renting also tends to be cheaper than owning in many areas and offers flexibility that homeownership doesn’t always have.

Suppose your family grows or shrinks while you’re renting a house or apartment. It’s easier (and less expensive) to rent another home that has new bedrooms and bathrooms that are more suitable for you at the moment than trying to make the same change with owning a home.

Renters also don’t normally have to pay for repairs or maintenance. Any homeowner who has had to replace flooring, a water heater, or another costly appliance knows the pain and inconvenience of having to come up with funds to fix an issue.

A mortgage payment is an investment – rent is not

When you own a home, the money you put into your mortgage is yours. In contrast, when you rent a home, the money that goes towards your rent is not your own; it goes to the landlord, who has complete control over what they do with it.

When you own a home and make payments on time every month, that money goes toward paying down your principal balance so that, eventually, there will be nothing left to pay off. That’s right; eventually, you could owe nothing on your home. You’ll also save thousands in interest by paying off your loan early and avoiding unnecessary fees like prepayment penalties or late charges (which are common among rental agreements).

After thirty years of paying off a $300K home, you can sell that home and keep almost all the profit. In contrast, if you rent for 30 years, you won’t have anything to show for it.


If you’re looking to buy a home, the decision is not one that should be taken lightly. It can be an investment in your future and provide a sense of security that renting will never afford you. But if your plans are uncertain or you don’t have much cash on hand right now, then renting may be more appealing than owning for now.

There are many factors involved in deciding whether or not it makes sense for each individual situation but, hopefully, this article has given some insight into what those might look like.

If you have more questions about whether owning a home is right for you, or if you are unsure how to sell your current home, contact us here!

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