Buy a House or Rent - Which Costs More?

So you’ve hit a point where it may be time to consider buying a house. In today’s market, flooded with vacant properties, foreclosed bank-owned houses and motivated sellers, there are certainly deals to be had if you’re credit-worthy. But it’s not a decision to enter into lightly; renting and owning each come with their plusses and minuses. Renting vs. buying…renting vs. buying…it’s a big decision. Let’s have a quick look at which route might be best for you.

HOME OWNERSHIP

Plusses:

Property builds equity. That may not be such a comfort now that the housing market has tumbled, but that’s been the conventional wisdom for decades. And regardless of what happens in the short run, the housing market will turn around eventually.
Sense of community and stability. Knowing that you have a stake in your property and your neighborhood has certain intangible aspects; pride of ownership, sense of “belonging.”
Free to change décor. It’s yours; do with it what you will!
Not dependent on landlord for maintenance. Everyone knows there are lazy, disengaged or irresponsible landlords out there who aren’t willing to put anything back into their properties. Of course, the reverse of this is as follows:

Minuses:

Responsible for repairs and maintenance. This can be an important factor to keep in mind if you’re buying a fixer-upper, or if you’re paying on an older house that needs work. After your mortgage payment, are you going to be able to keep up on maintenance?
Responsible for property taxes. In most cases, the escrow part of your monthly payment will go towards taxes and insurance, but there are troubled mortgage companies out there who can’t be counted on to make that payment when the time comes. If that happens, you’ve got a whole new set of headaches
Loss of equity. Just turn on the news; especially if you’re living in a part of the country that’s been hard-hit by the recession, the equity you may have in your house may well have evaporated by now.
Lack of mobility. If your job relocates you or if your neighborhood begins to slide, home ownership can become a burden rather than an asset.

RENTING

Plusses:

Little responsibility for maintenance. It’s not your problem if the plumbing goes out or the roof starts leaking. A generous landlord may even let you trade out minor repairs or maintenance for a discount on your rent. This may be one of the biggest factors to think about in renting vs. buying.
Easier to move. If you decide to relocate, you’re not tied to a property that you need to rent out or sell first.

Minuses:

No tax advantages. The American tax system is set up to encourage home ownership; none of the tax breaks that a homeowner enjoys are available to a renter.
No control over rent increases. You’re at the mercy of your landlord should he decide to hike the rent. Of course, with the rash of exotic mortgages, ballooning ARM payments and local property tax hikes, some of the wind goes out of that particular point.
No equity is built up. If you’re considering home ownership as an investment, you won’t see any of those perks from renting.