How to decide between renting and buying

renting vs. buying yard sign in front of a house

When the weather heats up, so does the real estate market. Summer is prime home-buying season! But what if you’re not ready to buy a home? Is renting really more affordable than buying? If you’re making the big decision to buy or rent your next home, consider these factors.

Renting is a good idea when …

You’re thinking about making a big change. If you or your spouse is thinking about changing jobs or moving to a new area, renting can give you the flexibility you need until you know how much your income will change or which neighborhood you’d like to live in.

When you need or want to be in a certain area where home prices are rising. Maybe moving means a better school for your kids or an easier commute for your spouse, but the home prices in that area are out of your price range. Renting can be a great way to be where you want to be without breaking the bank.

You don’t want a lot of responsibility. Many people rent when they retire so if something goes wrong, they can call a landlord to fix it instead of having to do it themselves. Some landlords even include lawn care as part of a lease, so you can spend your weekend at the beach instead of sweating over a mower.

You’re in a city. In a city like Charlotte or Durham there is a wide variety of rental options, from luxury high rises to single-family homes. Cities with public transit options can also save you money on gas and auto insurance. If you want to live right downtown where all the action is, renting is a smart choice.

You want a smaller space. When your kids have all grown up and moved out, those extra bedrooms just turn into more space to heat and clean. Downsizing can lower your monthly bills and simplify your lifestyle.

Buying is a good idea when …

A mortgage payment would be less than monthly rent. In many areas, the monthly cost of homeownership is less than rent. Use a rent or buy calculator to estimate what a monthly payment would look like and how much you might reasonably expect to pay.  

You have enough for a down payment, fees and closing costs. Buying a home requires a number of upfront costs. The range of costs depends on factors like your credit score, what kind of mortgage you’re getting and the area in which you’re buying. If you’re not already prepared, start saving now!  

You’re ready to make an investment in your future. In many markets, especially areas in and close to growing cities, home prices are rising so quickly that what you buy today will be worth quite a bit more in the next few years.

You’re in a rural area. Home prices may be cheaper in rural areas than in large cities, especially if there’s not a big rental market in the area you’re living. Another benefit of rural home ownership is the potential for more room and fewer code restrictions if you want to grow your property.

You need more room. Speaking of wanting to grow, buying a home gives you the control to add on or rebuild as your needs change. Growing your family? Add another bedroom. Need a home office? Use a HELOC for renovations or to build an addition onto your house.

Don’t get in over your head with more house than you need or can afford. Home is where the heart is, so remember that whether you rent or buy, the most important thing to consider before you move to a new home is making sure it fits your life and your budget.

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