Should I Rent of Buy My Home?

Help Deciding Which is Right for You

The decision of whether to rent or buy a home is based on several factors, including your timeline, equity, amenities, maintenance, and taxes. This article helps you explore the pros and cons of renting and buying, as well as the financial implications of each.

The Pros of Renting Your Home

Renting a home in Texas, whether it's an apartment or a single-family house, has distinct benefits. Perhaps the most cited benefit is that lessees are not responsible for maintenance or repairs on a rental property. The landlord is responsible for the costs, scheduling, and supplies necessary for maintaining the property. For many residents, the decision to rent is based on relieving this burden. 

Renting a home eliminates the property tax responsibility and doesn't require a large down payment. It's a good solution for those looking for temporary living or a short-term option, as you don't have to worry about selling the property when you move. 

Additional benefits of renting an apartment can include amenities such as a pool, fitness center, or dog park. If a resident has an aversion to yardwork and landscaping, apartment living is a dream because the landscaping is taken care of by the property managers. 

The Cons of Renting Your Home

As with any housing option, there are also cons to renting. At the top of the list is the loss of rent money every month. In other words, renters do not build equity with monthly rental payments. It's a temporary solution, but it's not a long-term investment. Furthermore, renters are not permitted to deduct items such as mortgage interest or home improvements on their income tax returns.

Renting in many ways means the landlord has more control over your living situation than you do. Updates to fixtures, paint color, cabinets, flooring, and appliances require landlord approval. Rarely, if ever, does funding accompany such approval. 

Before renewing a lease for another term, landlords have the freedom to increase the cost of rent. In Texas, that often means passing the expense of increased property taxes along to tenants. 

Ultimately, the landlord also controls the length of the lease agreement. Tenants are bound by a contractual timeline that requires them to pay, sometimes expensive, fees to terminate the contract. This complicates future job transfers if employers are not willing to cover the expenses.

The Pros of Buying Your Own Home

The primary advantage of buying your own home is the equity you build over time. Unlike rental payments that are gone after they are paid, mortgage payments (minus interest and PMI) stay with the house. In other words, more payments build more equity. When you sell the house, the equity returns to you. If you don't sell the house, one day, the monthly payments will come to an end, and you still have the home. Buying a home is a long-term financial investment.

Owning a home is the crux of the American Dream, in part, because it means the freedom to make updates and remodel as finances allow. You're no longer at the mercy of a landlord or a lease, and your neighbors are typically farther away than just the width of a wall. 

The Cons of Buying Your Own Home

There are a couple of downsides to owning your own home as well. Homeowners are responsible for maintaining, repairing, and landscaping their properties. For handy people, this may not be a significant deterrent. For those without such skills, it means scheduling (and paying for) professionals to tackle the jobs. 

Homeowners in Texas also face fluctuating property taxes that may or may not impact the amount of monthly payments from year to year. 

Finally, job transfers require homeowners to do much more than break a lease. The home must either be put on the market or leased to a tenant before you move, unless you are willing to make two monthly mortgage payments for the foreseeable future. In short, homeowners are a little less flexible when it comes to picking up and moving on a whim.

From a Financial Standpoint

Renting is the best option if:

• You know you will only be in the area for a short amount of time
• You don't want to hassle with maintenance, repairs, or landscaping
• You are unable to save enough for a down payment 

Buying serves as a good investment if:

• You have the money for a down payment
• Your income is secure
• You have a credit score that allows you to qualify for a loan
• You can budget for maintenance and repairs (or you are generally handy)
• You plan to stay in that location for a while