Rent vs Own: Pros and Cons

Are you a renter wondering whether homeownership makes more sense at this point in your life? Use the list of advantages and disadvantages below to evaluate the relative costs, benefits, and drawbacks of owning versus renting your home.


Pros and Cons of Buying a Home

OWNERSHIP
ADVANTAGES


Building Equity
Stability & Sense of Belonging to a Community
Fewer Restrictions
Property Improvements
Cost Benefits: Lower Monthly Costs, Retirement Relief, Stable Payments & Tax Benefits
OWNERSHIP
DISADVANTAGES


Initial Costs
Hidden Costs
Annual Taxes and Fees
Potential for a Financial Loss
Loss of Mobility
  • compare  Click here for the full details on the advantages and disadvantages of homeownership.

    Advantages of Buying a Home


    Building Equity
    As you pay down the principal on your mortgage you are increasing the amount of equity you own in the property.You may also be able to increase the amount of your home’s value with home improvements such as paving a driveway, adding a garage, or redesigning the outdoor space to add curb appeal. Even small changes can have an impact on the value of your home.

    Stability and Sense of Belonging to a Community
    Homeowners tend to put down roots and stay in one place longer than a renter might, thus allowing them to become active members in the community in which they live.

    Fewer Restrictions
    As a homeowner you will have fewer restrictions over the choices within your home, provided you are not breaking local building codes or Home Owners Association (HOA) regulations. You will have more creative freedom to paint your walls, build a patio, replace old windows, update fixtures, etc.

    Property Improvements
    As a homeowner you will no longer be dependent upon a landlord to fix items or maintain your property. Not only will you have a choice over which items are replaced or added, but you will be able to do them on your own schedule.

    Cost Benefits –

    Monthly Costs
    Surprisingly, many times the monthly cost of owning a home can be less expensive than renting.

    Retirement Relief
    Although 30 years of payments on a home is a long time you are constantly building equity for use in retirement.

    Stable Payments
    Securing a fixed interest loan will also provide a long term stable payment that will not increase or decrease over the life of the loan.

    Tax Benefits
    The federal tax code can provide a number of benefits for homeowners ranging from property tax deductions and mortgage interest deductions to home improvement credits.


    Disadvantages of Buying a Home


    Initial Costs
    When you buy a home, a sizable amount of money will be needed for the initial down payment, closing and insurance costs. This sum can seem like a formidable amount of money, equaling several months' or even a year’s worth of rent. MaineHousing’s Advantage program can help first-time homebuyers make a down payment.

    Hidden Costs
    Costs associated with the maintenance and daily upkeep of your home can quickly add up. These can include trash pick-up, water and sewer service, lawn and garden maintenance, pest control, tree trimmings or removal, and other such maintenance fees.

    Annual Taxes and Fees
    Property taxes, insurance and possibly HOA dues can tack on a hefty price tag that will need to be paid on an annual basis.Some lenders will require or offer an escrow account to help pay for these items as part of your monthly mortgage payment instead of a yearly lump sum.

    Potential for a Financial Loss
    Equity in your home does not automatically equate to profit. If the value of your home decreases during your time as a homeowner, then your financial gain might also decrease.

    Loss of Mobility
    Once you have a purchased a house you lose the ability to pack up and move with ease. It takes both time and money to sell a property which may ultimately result in a net loss.



Pros & Cons of Renting

RENTAL
ADVANTAGES


Less Responsibility
Freedom To Move
Lower Credit Requirements
Inclusion of Utilities
RENTAL
DISADVANTAGES


Lack of Equity
Limitations
Rental Payment Forever and Likely to Increase
Possibility of Eviction
  • compare  Click here for the full details on the advantages and disadvantages of renting.

    Advantages of Renting


    Responsibility
    As a renter you will have little or no responsibility for the daily maintenance or repair costs associated with your home. You don’t have to call an expensive repair person – you just need to call your landlord.

    Freedom to Move
    Relocation is far easier when all you need to do is give notice to your landlord instead of selling a property.

    Credit Requirements
    If a credit check is required during your rental application process, qualifications are generally less strict than if you were applying for a mortgage.

    Inclusion of Utilities
    Depending on where you rent, utilities such as heat, hot water and even cable may be included in your rent, easing the monthly burden of added expenses.


    Disadvantages of Renting


    Lack of Equity
    Rental payments will not give you a share of ownership in the property so when you leave the property you will walk away with nothing.

    Limitations
    You may be limited to what you can do or bring into your home such as decorating or having pets.

    Rental Payments
    Rental payments will never stop as opposed to a mortgage. In addition, your rent amount will likely increase even if some level of rent control is in place.

    Possibility of Eviction
    If the landlord sells the property, you may be forced to move with little recourse.

     

Contact Us

353 Water Street  •  Augusta, ME 04330
(800) 452-4668  •  (207) 626-4600
Fax (207) 626-4678  •  Maine Relay 711
MaineHousing Facebook Page MaineHousing Twitter Page MaineHousing Instagram Page MaineHousing Pinterest Page Fairhousing
 
 

MaineHousing does not support or endorse external links.

Home   |   Privacy Policy   |   Site Map

© 2017 MaineHousing. All rights reserved.