Renting vs. Owning a Home

Renting vs. Owning a Home
by Tamara Rein - July 20, 2022, ,

The American Dream includes buying a home. Buying or renting affects your finances, lifestyle, and personal aspirations. Your choice relies on your lifestyle and budget. Both require a regular income (to fund payments and fees) and some effort to maintain.

Renting and owning are very different. Renting doesn't come with homeownership duties, so you have more flexibility. Homeownership is a major investment, but it's expensive both upfront and over time.

Renting isn't always easier than buying, and buying isn't always better. We compare buying vs. renting.

Table of Contents

Home rental

Renters know their monthly expenditures. You can arrange for this amount from your lease. Your landlord may include utilities, storage, and HOA fees if you live in a condo in that sum.

When your lease renews, you may face rent increases. In some neighborhoods, rent increases are considerably greater. In areas with rent limits and rent control, landlords are limited in how much they can raise the rent, if at all.

When your lease is up, you can move. If your landlord sells the property or turns your apartment complex into condos, you may have to move quickly. Less significantly, they could raise your rent.


Since real estate is an illiquid asset, moving when you own a home can be costly. You can't always sell. If the property market is low, you may not get the price you want even if you do. Even if it's up, selling a property is expensive.

Even if your mortgage payment is cheaper than rent, buying is more expensive overall. As a homeowner, you'll incur these expenses that renters don't:

  • Taxes
  • Recycling (some landlords require renters to pay this)
  • Water/sewer (some landlords require renters to pay this)
  • Exterminator
  • Pruning
  • Home Insurance
  • Pool Cleaning (if you have one)
  • Required flood insurance (in some areas)
  • Seismic coverage (in some areas)

In the early years of a long-term mortgage, mortgage interest might dominate monthly payments. A 30-year mortgage can take 13 years before more of your payment goes towards a conclusion. A $100,000, 4-percent, a 30-year loan will cost $72,000 in interest. If you itemize, you'll recuperate part of it.

Repairs and maintenance can be expensive. A roof leak may occur. Your house insurance may not cover $12,000 to replace your roof. So you have to think deeply before buying too.

If you are interested in more articles like this, here’s one about how many people can buy a house together.

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