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Homeowner vs. Renter: Helpful Things to Consider

To rent or to own – that is the question. Is it smarter to take on the responsibilities of owning your home or to give up ownership and let your landlord take care of most of the maintenance and upkeep? Many different factors impact what the best option is for you. Here are the most important things to consider when making the decision.

How Much You Can Afford

Renting can feel like you’re wasting money that you could be putting toward owning something. Purchasing a home is obviously a huge financial commitment that requires a large up-front investment. How can you decide if you can afford to buy?

If you want a super quick estimation, multiply your salary by two and half times. Your home should cost no more than that. Before purchasing a home though, you should consider other financial factors as well. Take into account your take-home pay, any debt you may have and other expenses. Don’t forget to leave a bit of a cushion in your budget too.

You’ll also have to calculate your down payment and the mortgage you can afford. The general is that you should be able to pay a down payment of around 20%. This will help you to get a better interest rate on your mortgage. You can find many tools online to help you calculate what you can afford and determine whether buying or renting is the best option.

Opportunity Cost

The fact that you can afford a house doesn’t necessarily mean you should buy one. Considering opportunity cost, which is the benefits you’re missing out on by making the choice you’re making, can help you decide what makes the most financial sense.

When you’re renting, you’re giving up money that you could be putting toward owning a house. This might make it seem that buying is always the best choice if you can afford it, but that’s not always true.

You have to consider all of the costs of owning a home including the down payment, your mortgage interest payments, the cost of upkeep and payment for homeowner’s insurance as compared to renter’s insurance. All of the money you invest in your home could also be invested elsewhere, such as the stock market or in bonds.

Sometimes renting a home will earn you more money in the long run. Other times, owning a home works out better. Which applies to you depends on whether a mortgage or rent would be cheaper, a number of expenses associated with owning the home and the housing market where you live. The New York Times’ calculator takes opportunity costs into account and can help you figure this out.

Be careful not to put all of your money into your home. Experts say that real estate should make up only about 20% to 40% of your net worth. The housing market fluctuates, so you shouldn’t bank everything you have on it.

Personal Preferences

Of course, choosing to rent or buy a home isn’t a purely financial decision. It’s also deeply personal. For some people, owning a home has been a long-time dream of theirs. For these people, ownership has more value, and they will be willing to give up more to have a home that they can call their own.

Other people may strongly dislike property maintenance and may be willing to give things up to avoid it. For others, homeownership just doesn’t fit their lifestyle. Renting a property gives you much more flexibility. When the lease is up, you can move elsewhere with no financial repercussions. When you buy a home, you have to stay put for a long time to make the investment worthwhile.

Sometimes, renting isn’t an option depending on the type of home you want. You won’t find many stand-alone single-family homes for rent, so if that’s what you want, you may have to purchase. It’s usually families that want these kinds of homes, and since many families prefer not to move too often, buying a home makes sense.

When choosing whether to buy or rent a home, you have to balance financial and emotional factors. You don’t need to buy a house just because you can afford one, but you should always make sure you can afford one before you make a payment. Figure out what you can afford and what makes the most financial sense. Then, factor in your personal preferences and make a choice that makes you happy while also maintaining your financial stability.


Kacey is a lifestyle blogger for The Drifter Collective, an eclectic lifestyle blog that expresses various forms of style through the influence of culture and the world around us. Kacey graduated with a degree in Communications while working for a lifestyle magazine. She has been able to fully embrace herself with the knowledge of nature, the power of exploring other locations and cultures, all while portraying her love for the world around her through her visually pleasing, culturally embracing and inspiring posts.

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