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Is it better to rent or to buy new house?
Is it better to rent or to buy new house?

Is it better to rent or to buy new house?

  • The choice between buying a home and renting one is among the biggest financial decisions that many adults make. But the costs of buying are more varied and complicated than for renting, making it hard to tell which is a better deal. To help you answer this question, our calculator takes the most important costs associated with buying a house and computes the equivalent monthly rent.

Renting Vs. Buying a House: Pros and Cons

  • Aside from your personal situation, there are some objective benefits and drawbacks to renting and buying that will exist in most scenarios.

Renting Pros And Cons


  • Mobility/ freedom to move around Landlord pays for maintenance

  • Doesn't require expensive closing costs No fluctuation in monthly housing expenses

  • Allows you to test-drive different living spaces


  • You don't build any equity Limited ability to customize your living space

  • Rent could go up over time Landlord might sell or decide to stop renting

  • Limited sense of home stability/ permanence

Buying Pros And Cons


  • You build equity over time Home value may increase over time You may reap tax benefits

  • Unlimited freedom to customize your living space Sense of home stability/ permanence


  • Closing costs can be prohibitive

  • Responsibility for maintenance and repairs which requires time and effort

  • Less flexibility to move (at greater difficulty/ expense) Home value may decrease

  • Recent tax laws could hamper tax benefits

How to Calculate Renting Vs. Buying A Home

  • Whether you would save more by renting or buying can depend on a few key factors. One is your location and the prices of other homes or rentals in your area. Next you need to consider your credit score and if a lender would find you creditworthy. After factoring in a home's purchase price, down payment and closing costs, as well as a monthly mortgage cost, compare that to the monthly cost of rent and subsequent assumed costs over a period of time. You'll be able to see the differences between costs as well as the perceived equity you would've built up in a home.

Final Thoughts

  • There isn't always a clear answer to the question of whether to rent or buy. Depending on your life situation and finances, the answer might change over time. There are other options, such as rent-to-own property, where you start out renting then move onto becoming a homeowner. No matter what decision you make, it's crucial that it's an informed one based on your financial situation and lifestyle.

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