Home ownership may be the "American dream," but it's also a big responsibility - after all, a house is the most expensive purchase most of us will ever make. Carefully consider your situation before deciding whether it's best to rent or buy.

Renting vs. buying

Why buy instead of rent?

Your monthly payments build equity and lead toward home ownership.
With a fixed-rate mortgage, your monthly payments will remain the same for the life of your loan.
Your mortgage interest may be tax-deductible. (Property taxes and mortgage points may also be deductible; consult your tax advisor.*)
If your home increases in value, you can make a profit when you sell.
A home can be passed on to children or other family members.
Home equity (the amount you own) can be used to finance educational expenses, home-improvement projects, small-business startup costs or other needs.
You can make changes or improvements at will.
A landlord can't decide to sell your house and force you to move.
  • Your monthly payments build equity and lead toward home ownership.
  • With a fixed-rate mortgage, your monthly payments will remain the same for the life of your loan.
  • Your mortgage interest may be tax-deductible. (Property taxes and mortgage points may also be deductible; consult your tax advisor.*)
  • If your home increases in value, you can make a profit when you sell.
  • A home can be passed on to children or other family members.
  • Home equity (the amount you own) can be used to finance educational expenses, home-improvement projects, small-business startup costs or other needs.
  • You can make changes or improvements at will.
  • A landlord can't decide to sell your house and force you to move.

Why rent instead of buy?

Your monthly payments build equity and lead toward home ownership.
With a fixed-rate mortgage, your monthly payments will remain the same for the life of your loan.
Your mortgage interest may be tax-deductible. (Property taxes and mortgage points may also be deductible; consult your tax advisor.*)
If your home increases in value, you can make a profit when you sell.
A home can be passed on to children or other family members.
Home equity (the amount you own) can be used to finance educational expenses, home-improvement projects, small-business startup costs or other needs.
You can make changes or improvements at will.
A landlord can't decide to sell your house and force you to move.Monthly payments may be lower than mortgage payments. Use our mortgage calculator to determine what your mortgage payments may be.
  • Monthly payments may be lower than mortgage payments. Use our mortgage calculator to determine what your mortgage payments may be.
  • Compared with a mortgage, a lease is a short-term commitment.
  • Someone else performs (and pays for) repairs.
  • Rent payments may cover appliances, furniture, utilities and even cable/internet.
  • No significant down payment or loan closing costs are required to start renting.
  • Landlords might not scrutinize your credit history the way mortgage lenders will.
  • Rent payments that are a few days late typically won't hurt your credit score.
  • It's easier to sign a lease than to get approved for a mortgage.
  • There's no investment risk if the housing market changes.
  • You may be able to avoid home insurance premiums or association fees.

Seeing how much house you can afford is a good first step in balancing the decision to rent or buy.

Related Topics

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Find out how much you may be able to spend on your next home.

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