To Buy or To Rent?
| Buying | Renting | |
| Initial Expenses | Down payment, closing costs, and other fees | Renters security deposit, and brokers fee if applicable |
| Recurring Expenses | Mortgage payments, maintenance and renovation costs, property taxes and homeowner’s insurance. In addition to that condo fees or HOA as applicable | Monthly rent, renter’s insurance |
| Net Takings | Sale of home – (closing costs, which includes the broker’s commission and other fees + the remaining principal balance on mortgage to the bank + tax on profit that exceeds your capital gains exclusion as applicable) | Renters security deposit at the end of lease |
| Advantage | Tax deductible – property taxes, interest of the mortgage payment and, a portion of the common charges if applicable | No tax deductibles |
Other than the expenses, other factors that should be taken into consideration are:
- Status of employment – short term or uncertain employment it is better up for renting rather than buying. A steady income every month is the best for buying
- Limited Funds – Buying needs 15% to 25% of down payment usually. In addition to a steady income, savings are required for buying home.
- Period of Stay – It is usually said that one can expect to reap financial benefits after 5 years of owning home. Adding up to steady income and savings, it is required to stay put in a place you buy to expect any return on investment.