How To Choose Between Renting & Buying A Home

    Published: 06-16-2009
    Views: 12,207
    Wells Fargo financial expert Tamara Broderick discusses how to choose between renting and buying a home.

    Tamara Bodrick: Hi! I am Tamara with Wells Fargo. Today we are discussing things to consider, to help you decide if you should rent or buy a home. While owning a home has wonderful advantages, it is one of the largest purchases most people make. Here are some considerations to think about to help you make informed decisions.

    Added Financial Responsibility: You will need to pay for utilities, maintenance and repairs, that's on top of your mortgage payments, property taxes and homeowners insurance. Potential Risk: Real estate may increase in value over time, but not always. Your property value can also go down.

    Tighter Ties: As a renter you can pick up and move with short notice, when you own a home, selling it before you move is more complicated. Renting may require a smaller monthly expense than a mortgage payment, which includes principal, interest, taxes and insurance. In some cases renting may free up additional cash that allows you to invest or save. However, over time the cost of renting may outweigh the cost of buying a home.

    Buying a home has many benefits; you become a part of a community, experience security of owning the roof over your head and have the opportunity to create a home that meets your needs and style. You may also enjoy opportunities to build home equity. Unlike rent, the principal portion of every mortgage payment you make has a potential to increase equity in your home.

    Gain Potential Tax Benefits: Your mortgage interest and real estate property taxes are usually tax-deductible when you file your income tax returns; consult a tax advisor regarding the deductibility of your interests.

    Manage Your Credit: Making on-time mortgage payments can help you create a strong credit history. Be your own landlord. When you own your home, rent increases, cancel leases and other unexpected tenant hassles will be a thing of the past.

    When choosing whether to rent or buy a home, you really need to look at both options carefully. If you have questions or concerns, consider talking to a financial professional about this decision.