Renting vs. Buying: Which Is Better?
by First Financial Bank

It’s a question without a right answer. For some people, home ownership represents the American Dream—serving as the pinnacle of the transition into adulthood. For others, it may feel like a hassle. Wherever you land, buying a house is a decision you shouldn’t rush.

The truth is, there are no simple answers to the question of renting vs. buying. The best thing to do is talk with a mortgage loan officer to learn about your options and to check out our buying vs. renting calculator to help you make a good financial decision. But, here’s some general information to get you started.

Do I need a big down payment?

Although buying a home can be a smart investment, it’s the largest financial investment you will likely ever make, so be sure you’ve thought it through. The consequences for nonpayment or late-payment on a mortgage can have an impact on your taxes, credit history and your future purchasing ability.

The first thing many people think about is how much of a down payment they need. It’s often a point that scares off many first-time home buyers. While the industry has traditionally suggested a 20% down payment, many institutions now offer low down payment programs and even down payment assistance programs. It’s worth checking with a mortgage loan officer or banking center to see what flexible options are available based on your personal financial situation.

Why do you want to buy a home?

Taking on the responsibility of a mortgage is a serious financial commitment. What is your reason for wanting to buy versus rent? If it’s just because you’ve hit adulthood, you have a steady job and it seems like the logical next step, then it is important to know that plenty of consumers choose to remain renters, and this too can be a very good financial decision.

Think about your lifestyle. Are your ready for a long-term housing commitment or do you need the freedom to move at a month’s notice? There are other expenses that come along with home ownership, like property taxes, home insurance and maintenance costs so be sure you have the monthly budget to support the entire package.

You’re the only one who can decide if you want to be a renter or a home owner. Talking with a mortgage loan officer and reviewing the reasons others have used in their decision-making may help. Here are some common considerations:

4 reasons to rent:

  1. Sometimes you get more for your money on a month-by-month basis. Depending on your monthly rent, you may be able to put more money in savings, stocks or other investments that may accumulate wealth faster than real estate.
  2. With most leases, major repairs are the landlord’s problem. That means you’re off the hook when the furnace breaks, the roof leaks or the windows need replaced.
  3. You’ll never be “upside down” on your rent. In other words, you’re immune from owing more than a home is worth because of fluctuations in the real estate market
  4. Renting can give you time to save more money for a larger down payment and better terms on a home loan for the future.

4 reasons to buy:

  1. By making mortgage payments, you are investing in an asset that can appreciate over time. If you sell at the right time, you can get back more than the money you paid out.
  2. Home ownership offers certain tax advantages. Generally, the interest you pay on your mortgage is tax deductible.
  3. By securing a mortgage with a fixed rate, you can lock in your payments until your home is paid off. Renters often find themselves facing annual rent increases.
  4. For the most part, you won’t need permission to make changes to your home. As long as you are compliant with local ordinances and neighborhood covenants, you can remodel, build an addition or bring home a new pet, all at your own discretion.

Deciding to buy a home is a major financial decision, and the timing must be right for you and your situation. First Financial Bank offers an extensive choice of mortgage solutions. Let us help find the right solution for you when the time is right.