Renting Vs. Buying A House: Which Is Right For You?

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It’s an interesting time to be debating whether to buy or rent. According to the U.S. Census Bureau, the national homeownership rate in the third quarter of 2023 was 66 percent — meaning two-thirds of Americans are homeowners. At times during the past couple years, it seemed as if the entire other third of the population was racing to buy a home themselves, spurred on by record-low mortgage rates.

However, rates are now significantly higher, and housing prices are at historically high levels as well. Many people who can’t afford the inflated rates and prices are choosing to wait out the market instead. But rents are not so cheap either, especially in popular markets. What should you do? Here are the advantages and disadvantages of renting versus buying a house to consider before making a decision.

Renting vs. buying a house: Pros and cons

Buying

Pros

• Builds equity that could be accessible through home equity products
• Builds credit
• No landlord to answer to
• More stability
• Possible tax benefits
• Can decorate, improve or upgrade home to your taste

Cons

• Requires substantial money upfront
• Could lose money if home values decline
• Extra expenses beyond mortgage payments
• Rising home prices and low inventory in many markets
• Responsible for the cost of repairs and maintenance

Renting

Pros

• Fewer upfront costs and paperwork
• Freedom to be more mobile
• Not responsible for maintenance or repairs
• No need to worry about falling home values
• Builds credit (if your landlord reports rent payments to the credit bureaus)
• No property tax bills

Cons

• Landlord could raise rent
• Might have to relocate on short notice if the landlord decides to sell the property
• Builds equity for the landlord, not you
• Limited vacancies in competitive rental markets
• No tax benefits
• Less freedom in design choices (paint colors, appliances)

Is renting really cheaper than owning?

The costs associated with renting a home vs. owning one depend heavily on where you live and the local housing market. Bankrate’s rent vs. buy calculator can help you break down many of these expenses.

Renting doesn’t require a down payment or a mortgage, and that freedom is appealing to many people. Most rental properties do require a security deposit, though, which protects the landlord against damage caused by the renter. You’ll usually put down the first and final months’ rent payments when…