Renting vs. Buying: Which is Better in 2020?
The question of whether to rent or buy a home is one many adults struggle with at some point in their life. While you can find plenty of advice suggesting one or the other, the truth is there’s no one right answer for everyone.
Buying a home is an investment. Whether you pay a rent or a mortgage, it’s the biggest expense in most people’s budgets. When you rent, that money goes to someone else; as a homeowner, you’re paying into your own future. This makes buying a home a good choice from a long-term financial standpoint.
Having said that, though, the up-front cost of homeownership is higher. For some, it’s hard enough to save up for the security deposit on a new apartment, much less the down payment on a home. Homeowners also have to foot the bill for their own maintenance, and this can lead to high unexpected expenses if the furnace dies or the water pipes break.
The choice to buy a home is a big decision, and the financial question is just one of many factors. Both renting and buying have advantages from a lifestyle perspective. Let’s look at the main ones to help you get a better idea of which is right for you.
Top 3 Reasons To Buy a Home This Year
#1: You get control over your living space.
When you rent, you’re often not allowed to put nail holes in the walls, much less undertake construction or renovation projects. If you want a home theater, for example, you won’t be able to install things like in-wall speakers or a ceiling projector mount. You can get around these restrictions with laser projectors and other high-tech gadgets, but your options are more limited. As a homeowner, you have freedom to customize the rooms to meet your needs, rather than shrinking your life to meet the space.
#2: You have long-term stability.
Most renters sign leases on a yearly basis. While many stay in one place longer, in most cases there’s no guarantee the landlord will offer to renew your lease when it ends. Landlords also can (and often do) raise rent from one year to the next, making it more difficult to plan your budget long-term.
As a homeowner, you own the property until you decide to sell it. This is especially appealing for families with school-aged children, since you can build a life While your monthly mortgage can change due to property tax increases or changes in your homeowner’s insurance, the premium and interest are usually fixed, so you can count on it to stay the same year after year.
#3: You set your own rules.
Renting means following the rules outlined by whoever owns the property. This can control everything from what pets you own to how much noise you can make. As a homeowner, you are the master of your own domain.
Top 3 Reasons To Keep Renting
#1: You have more flexibility.
Buying a house often isn’t a smart financial decision if you’re not planning to live there for at least 5 years. Moving gets a lot more complicated when you own a home, too. Once you buy, you’re committing to a specific neighborhood. If you’re not sure that you’ll be staying in your current city long-term, or if you want the choice to change to a new setting down the line, renting is often the smarter choice.
#2: You don’t have to worry about maintenance.
Not everyone has the savings reserves to replace expensive fixtures and appliances if they break. There’s also the hassle of either hiring a contractor or doing the DIY work—and deciding which is the best option for any given situation.
If something breaks in a rental property, the fix is easy: call the landlord. Costs are included in your monthly rent, and they either have maintenance staff or reliable contractors ready to go when they need them.
#3: You can use your savings for other things.
Homeowners need to have a certain amount in savings at all times to cover unexpected maintenance costs. This is in addition to any money you want to save for other emergencies, like a job loss or illness.
If you rent, you don’t have to worry as much about the size of your nest egg. That leaves you freedom to spend your extra income on travel, eating out, and other luxuries homeowners might not be able to afford.
So is it better to rent or buy?
The truth is, that’s a question only you can answer. Consider the advantages of each above, along with the financial question. That will help you decide if 2020 is the year you buy—or if renting is the best choice for you.