6.6 Renting vs. Buying a Home

Notes

Both options have costs and benefits. The better choice depends on your goals, savings and how long you will stay.

• Renting: lower up-front cost, flexibility to move, and the landlord usually handles repairs. You build no ownership.
• Buying: builds equity (the part of the home you own), but needs a down payment, a mortgage (home loan), property tax, insurance and maintenance.
• Example (made-up): a $200,000 home with 10% down needs $20,000 up front. Property tax at 1.5% is $3,000 a year.
• A home can rise or fall in value. Selling costs money, so buying usually works best if you stay several years.
• Rent of $1,000 a month is $12,000 a year.