Renting has a few pros on its side, but not when it comes to money. Here’s why:
Even if you’re lucky enough to have very low rent, the money you pay your landlord every month is still money you will never see again.
Pro to buying: You’re Building Equity
When you make payments on a mortgage loan every month, those payments go back into the value of your home, building up equity.
That’s equity you can actually use when you sell the home, or for collateral on a loan or a second mortgage if you need one.
The equity you build up in a property is real, tangible, and can be of incredible value to you when the home is paid off.
Con to buying: You Have To Come Up With A Down Payment
Even though the down payment is part of that equity, it’s usually a lot of money to provide upfront, especially when you’re already pouring money into rent every month.
Even if a bank offers you a mortgage that requires less than a 20% down payment, a smaller fraction of a lot of money is still a lot of money.
Saving for a down payment on a home purchase is a big financial commitment, and might mean making changes to your budget and lifestyle that are not comfortable or pleasant for you.
Pro to buying: Your Rent Will Never Go Up Again
As long as you have a fixed rate mortgage with a reputable lender, you will never pay more per month than you do for your very first monthly mortgage payment.
Landlords have the liberty to increase rent every time a lease is renewed.
A mortgage payment, on the other hand, stays exactly the same for the life of the mortgage.