You may be considering taking advantage of the record low mortgage rates and committing to homeownership, but you’re not sure if it makes sense for your situation and if it will be financially beneficial in the long-run. Here’s a breakdown of the pros and cons of renting, the pros and cons to buying and a calculator to help you determine which makes more sense for you.

Pros and cons of renting. Pros: It's easier to relocate. You're not responsible for repairs. No real estate taxes. No down payment. Cons: You miss out on potential home appreciation. You're not building equity. It's more difficult to personalize. Your landlord may increase rent. You're bound to lease agreement rules.If you move around often or simply don’t plan to live in the town for longer than five years, it may make more sense to rent your home. Additionally, if you already have a high amount of debt, are behind on retirement savings and have little cash on hand, you should focus first on stabilizing your financial situation before buying a home.

Pros and cons of buying. Pros: You build equity with each payment. Some costs are tax deductible. You may have more privacy. No down payment required. Cons: You're responsible for repairs. It's more difficult to relocate.

If you’re in good financial standing, have funds for a down payment, and have an acceptable credit score, you may be ready to buy a home. It is also a good idea to have an emergency fund that would help cover unexpected maintenance costs and even mortgage payments if you are unfortunately faced with reduced income.

Do the math!

Use our Rent vs. Buy financial calculator to determine how renting and buying compare in your specific financial situation. Simply plug in your monthly rent and rental insurance costs, as well as a variety of predicted homeowners expenses and click calculate!

Next steps:

  1. Check out our other Homeownership articles, infographics and videos.
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  3. Contact us if you have any questions about applying for a mortgage.