Everyone has to have a place to live, so the question for most people comes down to should we rent or should we buy? Deciding whether to rent or buy a home can be a financial decision as well as an emotional decision. Home ownership can be a very fulfilling financial and emotional aspect of life, but it has to make sense in order for it to be a sound decision. Both renting and buying have advantages and disadvantages that go along with them. It is important for you to analyze your personal situation to determine whether it is better for you to rent or whether it is better for you to buy.

Advantages of Renting 

There are advantages to renting rather than owning an apartment or home. When you rent, rent payments are usually  lower than mortgage payments. This is especially true in a high interest rate environment. In these situations, obtaining mortgage financing can be very expensive. The costs associated with renting a property are usually lower than those costs associated with buying a property. For example, to rent an apartment, it usually requires a cash deposit and possibly rent payments for the first and last month. There are typically more upfront costs when you buy a home. Down payments and closing costs are just the beginning.  

 
Renting also has advantages when it comes to repairs. If something in the house or apartment that you are renting breaks, it is the responsibility of the landlord to have it fixed. You, as the renter, have no financial obligation in making the repairs as longs as the problem has nothing to do with your actions and is not part of your personal property.

Advantages of Buying

One of the major advantages of owning a home is that the money that you put into the monthly mortgage payments will help you build equity in the home. This means that owning a home is a relatively safe cash investment that will ideally increase in value. The goal is to get a return on your investment (ROI). As neighborhood values increase, the value of your home can also increase, which can potentially make you money when you decide to sell. When mortgage interest rates are low, it is an advantageous time to buy. In many instances, mortgage payments can be the same or even lower than rent payments during a period of low interest rates.
 
When Does it Make More Sense to Rent Instead of Buy?

When is it more advantageous to rent? Renting makes more sense when the interest rates are high. It’s also the better option when you do not have enough cash for down payments and the other costs associated with buying a home.