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Should I Rent or Buy?

Owning a home is a big part of what many consider to be the American dream. But is it always the best financial decision?

Consider These Factors

There are many factors to consider when deciding whether to rent or buy, beyond the monthly mortgage or rent:

What is the health of the housing and rental markets where you live? Compare housing and rental costs for similar properties within your price range. Research trends in property values that could affect a long-term investment.

How long do you plan to stay in your home? The longer you stay in your home, the more attractive home ownership becomes – provided that your property holds steady or increases in value.

What’s the stability of your income? Both renting and buying require stable income – however while breaking a lease agreement may affect your credit, foreclosure carries a larger penalty and remains on your credit history for seven years. 

What home buying and ownership costs can you afford? Remember that in addition to your mortgage, home ownership carries ongoing costs for maintenance, repairs, and garbage collection. There are also financial obligations for insurance, taxes and utilities such as water and heating. Condos may also have association fees.

What are current interest rates? If interest rates are low, it can tip the scales in favor of home ownership thanks to a lower monthly mortgage payment.

A renting vs. buying calculator can help you predict the real financial benefits of home ownership and renting.

Pros of Buying 

  • Control over your property
  • Potential tax benefits
  • Privacy 
  • An investment for your future 
  • Predictable monthly principle and interest payment with a fixed-rate mortgage

Cons of Buying

  • Upfront costs greater than renting
  • Ongoing maintenance and repair costs 
  • Less flexibility to pick up and go
  • The housing market can be unpredictable  

Pros of Renting

  • Small deposit instead of large down payment 
  • Little to no cost and responsibility for maintenance
  • Flexibility to move, depending on lease terms
  • May have on-site amenities such as a fitness center 
  • Lower financial risk

Cons of Renting

  • No investment value 
  • Less control over your environment
  • Subject to landlord’s decisions to renew lease, raise rent
  • No federal tax breaks

Please note, membership is required to accept a DCU Mortgage.

This article is for informational purposes only. It is not intended to serve as legal, financial, investment or tax advice or indicate that a specific DCU product or service is right for you. For specific advice about your unique circumstances, you may wish to consult a financial professional.