Buying Vs Renting A House – Which Is Right For You?

Buying or renting a home is a big decision, both financially and personally. Each option has its benefits and drawbacks, and neither choice is necessarily right or wrong. The decision of buying or renting a house is ultimately very personal, and it’s important to know pros and cons of each before deciding what’s right for you. To help you make the right decision, we here at Fifth&Hazel have put together a short list of the pros and cons of buying vs renting a house that will help you get a better idea of the benefits and drawbacks of each.

buying vs renting a house

Pros Of Renting


- Fixed and low monthly payments – when you’re a renter, you know exactly how much you need to pay every month for the entire term of your lease. There are no unexpected repairs you need to finance or out of the blue increases in homeowner’s insurance.

- Low upfront costs – when compared to the upfront costs of buying a home, the costs of moving into and renting a house or apartment are almost nonexistent. You can expect to pay a deposit and rental application fees, but those pale in comparison to the upfront costs of buying a house.

- Flexibility – renting offers much more flexibility when it comes to your living situation. Found a great career opportunity a few states over? You’re free to move without a mortgage and house weighing you down. You won’t have to worry about selling or renting out the house you’ve left behind, and are free to move on to a fresh start elsewhere.

pros and cons of renting a house

Cons Of Renting


- Monthly payments don’t build your net worth – your monthly rent payments secure your living situation, and may possibly raise your credit, but nothing else. This is what people mean when they say that renting is like “throwing money away”. While that’s an overgeneralization, similar payments towards a mortgage could be a better long-term investment.

- Renting is not always stable – because you’re not the owner of the property, you will be directly affected by your landlord’s decisions. They may decide not to renew your lease, or choose to sell the property to a new owner. These are just two of the many situations that could send you house hunting sooner than you had planned, which is a real possibility to consider when you live as a tenant.

- You can’t make changes to the property – when you’re renting, whether it be a house or an apartment, the property does not belong to you. If you don’t like the layout of the kitchen, you simply have to live with it. You won’t be able to put up that funky wallpaper, and every shelf you hang will come with second thoughts on whether it’s worth the trouble to repair when you move out.

buying or renting a house

Pros Of Homeownership


- Builds equity – homeownership has the potential to build equity and grow your net worth over time. Each mortgage payment you make goes towards a home that you own, and that is (ideally) increasing in value over the years.

- Builds credit – every mortgage payment that you make to the lender in full and on time goes towards building your credit. Conversely, missing payments or going into foreclosure could seriously harm your credit, so make sure you know what you can afford before closing on a home.

- A home to call your own – homeownership has the innate emotional benefit of having a place that is completely yours. You don’t have to answer to a landlord, don’t have to worry about your lease being terminated, and have complete freedom to make modifications and upgrades to the property.

should I buy or rent a house

Cons Of Homeownership


- Unexpected expenses and high upfront costs – buying a house comes with high upfront costs and ongoing maintenance costs. Even if you have the money for a down payment (ideally 20%), you will want to build a “rainy day” fund in case of unexpected and often costly repairs that may not be covered by your homeowner’s insurance.

- Property prices can fall – in every market there are both ups and downs, and the housing market is no exception. While it is generally less volatile than other investments, the housing market is not immune to dips or stagnation. If this happens, you may find yourself paying more for the home than it’s worth (known as going underwater) or with a house that has depreciated in value after you’ve paid it off.

- Less flexible than renting – while selling your house is (almost) always an option, homeownership tends to tie you down to a location in ways that renting does not. If you choose to relocate, you will need to either sell or rent your house, which may be easier said than done depending on the state of the market.