Renting Versus Buying

Is buying better than renting? It depends on whom you ask.

If you question your financial planner, she'll probably assert, "Yes!" and pull out a spreadsheet showing the investment and tax advantages.

If you ask a globetrotting couple you know, they'll probably disagree with her emphatically, arguing that a home will leave you little time or money for recreation.

The truth is, buying a home is a highly individual decision, dependent on a variety of lifestyle and financial factors. Ask yourself these questions to help determine if it's right for you:

How long do I plan to stay in my current community?
Homes take time to appreciate in value. If your employer's hinting around at relocation, or the walls of your small town are closing in on you, consider that you might only break even – or even take a loss – if you have to sell your home quickly.

If your job situation seems secure, however, and you enjoy the amenities your community offers, buying is a next logical step.

Do I have time to maintain a home?
Unless you're currently leasing a house and handling all the maintenance yourself, home ownership will generally require more of your time than renting. Of course, for some homeowners, the associated work – raking leaves, mowing the lawn and painting the family room – serves as recreation in itself.

Some buyers will purchase a condominium in order to avoid time-consuming outdoor chores. If you're looking at that option, be sure to factor in property management fees in your housing estimates.

Can I afford it?
Most renters assume that buying costs considerably more than renting, but you may be surprised. First, if you consider the monthly total on your rent, utilities and renter's insurance, you might be paying more for housing than you thought.

Second, even if you don't have tens of thousands saved for the standard 20 percent down, many lenders today offer lower down payment options. Some will even finance your closing costs. Remember though, the more you finance, the more your monthly payments will be.

Do I want to personalize my living quarters as I please?
Maybe you've grown tired of the eggshell white walls of your cookie-cutter apartment, or you can't convince your landlord to replace the brown shag carpeting in your rental. When you own your home, you can mostly do with it as you please – paint the kitchen in Green Bay Packers gold, cover your den in knotty pine paneling or wallpaper your bedroom ceilings in Laura Ashley florals. True, it all costs money – but when you buy your own place, it's a choice you get to make.