Own vs. Rent: Consider This Before Renewing a Lease Agreement
The decision to buy can depend on many factors, but the financial benefits are big when compared to renting. See how quickly buying vs. renting can put you ahead.
Rent or buy? It’s never an easy decision, but the financial benefits of buying a home can quickly surpass those of renting. We’ve made a few simple assumptions in our infographic that reflect a remarkable benefit of purchasing instead of renting after just five years.
It’s your money
When you buy a home, it becomes an investment—probably one of the largest you’ll ever make. Unlike rent money that is gone forever, money applied to the down payment for a home purchase, and the principal payments that follow, contribute toward your future.
Your investment in a home comes with tax benefits as well. Mortgage interest is tax deductible! (Mortgage insurance premiums are tax deductible too.) But there are no tax breaks for rent payments.
Then consider the appreciation of your investment. That is, a home’s value typically increases over time. But if you are renting, your landlord might increase your monthly payments instead.
In five years, when you consider your equity and tax savings, you come out ahead compared with any savings you might realize with slightly smaller rent payments.
So if you are going to be paying rent for at least five years, buying a home instead of renting one might be a financially savvy decision.
Learn more about Owning vs Renting.