Renting vs Owning a Home

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There are many factors to weigh when considering renting vs owning a home. Each choice provides great benefits, but deciding which is better requires the consumer to conduct research and to examine her financial situation. A potential renter or homeowner should review his or her financial circumstances, potential lifestyles changes (family additions, job changes, and so on) and long-term goals that could affect living arrangements.


When someone chooses to rent a home, she is responsible only for paying the monthly payment as stipulated by the contract, paying for utilities (power, gas and electricity) and for limited kinds of maintenance to the property. Renting a home allows the tenant flexibility to move or upgrade at almost any time, depending upon the lease. Renting can also allow a tenant to build up savings, as her investment into the property is minimal. These factors are a plus for tenants whose lifestyles do not allow them to purchase a home or whose incomes do not allow them to afford a mortgage loan.

Although renting requires less responsibility and provides flexibility, it has its disadvantages too. Renters do not earn equity in the home. Since the renter is not the owner, she is not able to reap the tax incentives or equity earned on the home. In addition to not being able to take advantage of homeowner's tax incentives, the renter may find that annual rent increases can outpace the economy.


Owning a home is part of the American dream. Ownership provides several benefits, including a sense of stability and security. It also provides tax-incentives. Owners are able to write off mortgage interest and taxes paid on the home on their income taxes. Owners earn equity in their home and can create retirement security.

Nevertheless, as with renting, owning a home has certain downsides. Owning a home requires a significant investment. The investment includes securing the mortgage loan (with the down payment, home inspection and any other associated fees), paying property taxes, maintaining the property and making home repairs. These costs add up and can be financially challenging for many homeowners. Another disadvantage is the lack of flexibility to move. If an owner wants to relocate, doing so will require that he sell the property. This can be quite a daunting task when the market is not favorable.

Final Decision

When trying to determine whether renting a home or purchasing one would be most beneficial, an individual should first review her finances, lifestyle and goals. These three factors can be good indicators as to which option would be best. If choosing to purchase, the purchaser should review all costs associated with the initial investment and have savings or a savings plan in place to help cover unexpected costs. If choosing to rent, the renter should make monthly investments in a savings plan. Investing money for the future can make a transition from renter to homeowner smoother.