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Renting Vs Buying a House

renting vs buying a house


Renting vs Buying a house has always been an important debate, with each having its own advantages. A goal of buying or renting a house is one of the major goals that will greatly impact your lifestyle and financial health. Many proponents of homeownership argue that buying a house is an investment that builds equity and could help with tax deductions.

Nevertheless, renting also has positive points, including flexibility and no responsibility on the house. Though many people believe that homeownership is better than renting, an in-depth look at the facts presents a different scenario. 

Most Americans have grown with a common message associating owning a house with happiness and an American dream. The real estate industry is ever-growing big, with major players like real estate agents and mortgage lenders bombarding you with adverts to buy a house with some financial assistance. The debate of buying vs. renting a house rages on as proponents of both sides try to demonstrate that their decision makes more financial sense.

It is important to remember that buying a house is not always a better option than renting and that there are lots of dynamics with renting than it looks. You do well to examine the pros and cons of either side based on the prevailing circumstances. 


The U.S had a recent change in tax law that swung balance towards house renting, making homeownership less advantageous. This propelled the renting-buying debate even further. Renting gives you the freedom to move out of the house every time the lease ends without a penalty. Nevertheless, there is also a risk of the owner jetting you out of the house by selling it or raising the house rent to levels you cannot afford. 

The Myth on House Renting

Supporters of buying a house have often argued that renting is like “throwing your money away” & paying towards someone else’s equity. However, that is fallacious reasoning because we all need somewhere to live, and that space will cost some money.

They also reason that money invested in homeownership goes towards equity, but that may not be all true. While the money used in renting could build towards equity, some expenses involved in house ownership also do not contribute to equity. For instance, the cost of house repair and mortgage interest does not add value to your equity. 

Is House Renting Better Than Buying?

Though it is a dream for many Americans and many people globally to own a house, it is also advantageous to rent.

The cost of homeownership in the United States is higher than many think.  

In the United States, many believe that buying a house is always an economically sound decision than renting. That conclusion should be reviewed based on the current circumstances. Paying rent does not mean the renter is wasting money.

While it is true that the money you paid will never come to you, but you are getting shelter for your loved ones. Buying a house also involves spending money you will never see again, such as taxes, interests, and other fees.

Some may reason that the mortgage interest is less than the monthly rent, but the associated cost could cost up to 50%+ of the mortgage payment. Before making a decision, you also want to consider some costs, such as mortgage insurance, property taxes, home insurance premiums, utilities,  maintenance and repairs, flood insurance, and Condo fees. 

Is house renting better than buying

No Down Payment

The deposit cost when buying a house is higher than the security cost that renters are required to pay as an equivalence of a month’s rent. This security deposit will be returned to you when you leave the house, provided you have left the house in good condition. Since most people use mortgages to buy their houses, they are often needed to deposit a certain amount of down payment, approximately 20% of the value of that house. The advantage of this payment is that when you clear the mortgage, the home equity increases, something renters will not attain. 

Renting could cost less, even in the long run.

The duration you intend to stay in place may determine if you are buying a house or not. It is a known rule that if you do not intend to stay in place for more than five years, do not buy a house there. If you purchase a house and live there for 30 years, there is a possibility that the house value will appreciate, offsetting any associated costs. On the other hand, if you buy and own a house for four years, there is a higher probability that your home value would not have appreciated, leading to the potential loss of your investment. Therefore, you should compare the total cost of both options before deciding on the best course of action. 

Renters are Flexible to Downsize

At the end of the lease, a renter can downsize into an affordable living space. This can especially benefit retirees, who would prefer a less costly and smaller house that fits the budget. Buying a house involves a lot of investment, making it hard for owners to move into affordable housing. You probably had spent a lot of money on the renovation, and selling the house may not cover these costs, causing some to remain in the home. 

Lower Utility costs

Most rental houses are relatively smaller than mortgaged houses, meaning that a person who bought a house is likely to deal with higher utility costs. Electricity and water bills will likely be higher for homeowners than those renting.  

Buying a House

Homeownership has its benefits, including a sense of stability, pride in homeownership, and belonging to a community. Nevertheless, it will not be suitable for those on constant move. Selling a house takes time due to its illiquidity, and it might end up costing lots of transaction costs. When you own a house, your flexibility is limited, meaning you are stuck with your house location; otherwise, you could face potential financial loss. 

One of the biggest drawbacks of homeownership is the monthly mortgage interest expense that can be huge in the long run. Some of these rates can take many years to pay, resulting in additional costs on the principal. The renovation projects do not increase the house value by a larger margin, enabling you to recoup only 66 cents on every dollar you spend. Nevertheless, house ownership also has advantages if you intend to stay in a place for a long or a lifetime.

Benefits of Buying a House

benefits of buying a house

Building Equity

With time there are higher chances that your house’s value will increase as you pay off the mortgage. When the mortgage is done, you can leverage your home equity, which you could use to borrow on mortgage refinancing. You could use the funds for various things, including going on a special holiday, renovation, or buying a new car.

Living security

Homeownership promotes a measure of security for you and your family since your stay is not dependent on the landlord, who may wake up one day to throw you in the cold. You will not have to deal with the emotional trauma of the unexpected move that can inconvenience your family.

More Control Over Costs

The landlord can increase your rent unexpectedly when renting, forcing you to accept the unfavorable price or incur moving costs. The mortgage interest rates, fees, and taxes are less likely to increase by a larger margin overnight for homeowners.

Mortgage Repayments are Savings

The money you put into the house as principal and mortgage interest gives you house ownership.  This means that in the end, the house will become an asset with which you can acquire a loan for further investments. 

Buying or Renting A House?

The best option in this decision is not purely based on money as your vision for life and comfort are also involved. Owning a house does not always make more financial sense, even in the long run, and renting a house does not mean throwing money down the drain. You can not base the decision to buy a house by comparing your monthly rent to the mortgage payment because there are more involved in the house business than simple comparisons. 

Buying a home should also not be determined by religion, race, or marital status. This means that even members of the minority group should own home if the circumstances make sense. Buying a house while you are single is an excellent idea, too, since mortgage lenders do not consider marital status in financing a home. 

If your eyes are focused on buying a house, you do well to consider the risks involved. You will need huge security to get a mortgage, and should house prices go up; you stand a chance of winning big. However, you could lose everything if the house prices drop as they did during the subprime mortgage meltdown.


The decision to buy or rent a house is a huge decision that requires a consideration of several factors. After weighing on the pros and cons of each option, one should arrive at the right course of action. This decision will require that you consider both the financial and emotional welfare of your family. Buying a house will give you ad your family a sense of stability. However, it will also weigh you down financially as you deal with endless taxes, interest rates, and additional expenses, such as insurance. On the other hand, renting may save you from these financial worries. But you may have to grapple with the fear that your family may be evicted anytime at the whim of the landlord. 

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