Q: What are the pros and cons of renting a home vs. buying

Answers

anon_414 on May 23, 2010
There are several advantages to renting a home rather than buying. The most obvious advantage is not being responsible for major maintenance or repairs. A second advantage is being able to move to a new home or even to a new city or state without having to sell your home. Owning a home can be especially problematic if a job situation forces you to move during a downturn in the housing market. Owning a home offers you the chance to build up equity (wealth) with each monthly payment. This is a small advantage when you first buy a home, as your monthly payment during the first few years of your mortgage will mainly go towards interest. Ask a bank or mortgage company for an ‘amortization table’ before signing a loan agreement so that you will know how much of each payment is being applied to what you owe on the home. In a good housing market, your home will also increase in value, another advantage to ownership. To offset these advantages, all of the responsibility for repairs, maintenance, and upkeep are on your shoulders as a homeowner. Particularly with an older home, repairs can turn a house into a ‘money pit,’ offsetting any wealth you may gain from an increase in home prices. If you are confident that you will be in a home for a long period of time, and that the home is in good shape and won’t need major repairs in the near future, the advantages of ownership probably outweigh the disadvantages. If your job situation could require you to move within a few years, renting will give you greater flexibility.

anon_413 on May 22, 2010
You should rent a home when you are not sure how long you live in a place. In such cases you limit your risk of loosing money and having to deal with a rushed sale when you should be worrying about moving, setting up a new work and taking care of other business. You should buy a home when you can at least ensure that you will be living in a place for several years – preferably 5 years. Further disadvantages of buying are simply control (no landlord will tell you not to put nails in the walls), and comfort in ownership. You should only buy a home if you can at least produce 20% of the money that is involved in cash and your mortgage plan does not require you and your partner not to loose any job.