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Should you rent or buy a house?

There are many factors to consider when deciding between renting vs. buying a home. Both options come with their fair share of financial implications so it’s important to understand the advantages and disadvantages of each prior to making a commitment.

Renting a home often provides more upfront flexibility with your finances, however, you will miss out on making a long-term investment. Buying a home allows you to build equity and reap tax benefits, but owning also comes with more financial responsibility and a greater upfront investment.

Here are the biggest pros and cons for renting vs. buying a home.

Renting Pros
 

  • Smaller, one-time deposit
     

  • Limited financial liability
     

  • No property taxes
     

  • Fewer unexpected costs
     

  • Shorter-term commitment

Buying Pros
 

  • Initial down payment goes toward home value
     

  • Money paid builds equity
     

  • Homeowners receive tax deductions and credits
     

  • Upgrade your home how you'd like
     

  • Potential for increased financial security
     

  • Consistent monthly payments

Renting Cons
 

  • Unexpected rent increases
     

  • Payments never stop
     

  • No long-term financial investment opportunity
     

  • More restrictions

Buying Cons
 

  • Increased financial responsibility
     

  • Larger, immediate investment
     

  • Potential instability in the housing market
     

  • Selling your home can be costly
     

  • Less flexibility when it comes time to move
     

  • Property taxes are costly and fluctuate

Application fee

Security deposit

First and last month's rent

Pet deposit

Down payment

Closing costs

Agent commission

Inspection fee

Warranty

Rent

Renter's insurance

Amenities fee

Monthly pet fee

Property taxes

Insurance

Homeowners insurance

Mortgage

Private mortgage insurance*

HOA fees (if applicable)

Home maintenance, repairs

*Only required if down payment is less than 20% or until homeowner has more than 20% of equity in their home.

Rent vs. Buy calculator

Our Rent vs. Buy calculator can help you weed through the fees, taxes and monthly payments to help you make a decision between these two options.

Calculator

How can an Ameriprise advisor help?

If you are considering a move and whether you should buy or rent a house, an Ameriprise advisor can help you:

  • Assess your current financial situation
  • Help develop a plan for short- and long-term goals
  • Provide support throughout the renting or home-buying process

Discuss renting vs. homeownership with a financial advisor

An Ameriprise advisor can help you navigate renting or buying a home and how both options will impact your overall financial situation.

Related information

Home loans

Learn about Ameriprise mortgages and how our partnership with Embrace Home Loans gives you access to competitive mortgage rates and top-rated customer service.

Buying a house

Buying a house is a major financial decision. This home-buying guide will help you better understand the process so you can buy with confidence.

Downsizing your home in retirement

As your life evolves, your needs change. That's especially true of your housing needs when you transition into retirement.

An Ameriprise financial advisor can help you navigate the options available when considering renting or buying a home.

Or, request an appointment online to speak with an advisor.

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At Ameriprise, the financial advice we give each of our clients is personalized, based on your goals and no one else's. 

If you know someone who could benefit from a conversation, please refer me.

Background and qualification information is available at FINRA's BrokerCheck website.
Ameriprise Financial cannot guarantee future financial results.
Ameriprise Financial, Inc. and its affiliates do not offer tax or legal advice. Consumers should consult with their tax advisor or attorney regarding their specific situation.
Investment products are not insured by the FDIC, NCUA or any federal agency, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value.
Ameriprise Financial Services, LLC. Member FINRA and SIPC.

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