Renting vs. Owning — What Are the Advantages?

Marc Winter
Jun 6
2 min read

Many Americans doubt their ability to cover the costs of buying a home. But that only means exchanging monthly mortgage payments for monthly rent payments.

Renting vs. owning — what are the advantages of each? Here are some things to consider before signing your next lease.

Advantages of renting

Fixed rent
No property taxes or HOA fees
Lower insurance costs (no homeowners insurance)
Your landlord is responsible for all repairs and maintenance
Various amenities (e.g., pools, gyms, common areas, etc.)

Renting typically involves only a year-to-year contract, offering flexibility that suits young professionals, students, or frequent movers, unlike buying a house.

Advantages of owning a home

Homeowners build equity with each mortgage payment
Mortgage payments are often cheaper than renting
Freedom to modify the property as you see fit
More room for you and your family
No need to share living spaces or walls with neighbors
Available tax deductions

For many Americans, owning vs. renting can be a better option for building equity, meaning the value you invest in a property. Otherwise, your rental monthly payments merely go to support your landlord, which isn’t the best long-term outlook.

Financial considerations for renting vs. owning a home

Chances are your decision about whether to rent or buy is about finances and the current housing market. Here’s how to consider the costs associated with owning vs. Renting.

Upfront costs

Buying a home involves high upfront costs like closing fees, while renters typically pay just a refundable security deposit equal to one month’s rent.

Ongoing costs

Renters often save on maintenance, taxes, and insurance, but rent can be high and unpredictable. Mortgages may offer lower, fixed monthly payments. Using a mortgage calculator can help compare costs.

Potential savings

Renting when young can help build credit and savings, offering a path to financial stability if rent is lower than a mortgage. However, homeowners often benefit from tax deductions on property taxes and home offices, which renters typically don’t receive.

Lifestyle factors for renting vs. owning

While finances matter, consider your living situation. Buying isn’t ideal if you plan to move within five years. Renting offers flexibility for unstable jobs or education, while homeownership provides stability and space for growing families.

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