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Renting vs. Buying a Home: Which is Better for You?

Should you rent or buy a home? It's an age-old question that many people face, especially when they're first starting out. Even if homeownership is your eventual goal, there are plenty of reasons to rent until you're ready to buy a home. In fact, data from the Pew Research Center shows that more millennials are choosing to live rent than ever before.

Determining where to live is a highly personal decision, and the pros and cons of renting vs. buying a home are different for everyone. When deciding if renting or buying is the best option for you, here are a few important questions to consider:

Where do you want to live?

Location is one of the first factors to consider when deciding between renting or buying. Do you dream of living in the heart of your city or a quiet neighborhood in the suburbs? In most large cities, renting is an easier and often more affordable choice than buying. But, depending on the region, a suburban area may mean more space for your money. The location you choose will largely depend on your lifestyle and where you spend most of your time.

How long do you want to stay in the home?

When buying a home, it's best to have a long-term mindset. Real estate experts typically recommend living in a home for at least five years before selling to recoup what you paid when buying the home and earn a return on your investment. The longer you live in your home, the more your home will appreciate in value, and the more equity you'll build.

Compared to buying, renting is more flexible, allowing you to test out an area before putting down your roots and making the financial commitment to buy a home. If you aren't sure if you'll still be living in an area in the next few years–whether it's due to your career, family, or other personal reasons–renting may be the better option.

Are you prepared to handle home maintenance and repairs yourself?

When you own a home, you're responsible for regular upkeep and repairs. From small maintenance tasks like lawn care and gutter cleanings to major home repairs like a new roof, there's a lot of time and money that goes into homeownership.

When you rent, these maintenance tasks and repairs are typically handled by property management. If you're not ready to invest your free time and extra cash into maintaining a home, renting can be far more convenient.

Can you afford a home?

Having enough money saved for a down payment is one of the biggest barriers to homeownership. But, the down payment is just one aspect of the expenses you'll incur as a homeowner. You'll also need to factor in closing costs, property taxes, insurance, homeowners association fees (if applicable), monthly mortgage loan payments, utilities and the cost of furnishing your new home, along with maintenance and repairs. Renting typically involves paying less in upfront costs. You might be required to pay a security deposit and renter's insurance, along with your regular monthly rent payments. If you're not sure if buying a home fits into your current budget, a mortgage calculator can give you an idea of what to expect.

Will buying a home prevent you from reaching other financial goals?

Buying a home is one of the most important financial decisions you make, but it shouldn't be your only focus. Don't let the pressure to buy a home deter you from other important goals, such as building an emergency fund, saving for retirement or paying down existing debt. Likewise, if making a down payment will put you in a tight financial situation, you may want to rent until you have more financial wiggle room. Only buy a home when you are financially and emotionally ready to commit.

Are you still wondering if you should rent or buy your next place? Wright-Patt Credit Union is here to help! We understand that buying a home is a big decision that depends on your personal and financial situation. When you're ready to talk to someone and learn more about your mortgage loan options, contact one of our friendly, knowledgeable Mortgage Loan Originators. We're here to help you save money and make the best decision for your situation.

For more helpful tips and advice on buying a home, including videos and interactive learning modules, check out our online Education Center