Should you rent or buy a home?

There are a lot of factors to consider before deciding whether you should buy a home or rent. 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 committment.

Renting a home often provides more upfront flexibility with your finances, however, you will miss out on the long-term investment aspect. 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.

Review the following to learn more about the biggest pros and cons for renting vs. buying.

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.

How can an Ameriprise advisor help?

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

  • Assess your current financial situation
  • Help develop a plan for short- & 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 each option to determine how renting and home ownership will impact your overall financial situation.

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.

There's a sense of confidence that comes from feeling in control of your finances - and working with a financial advisor can help you get there. Please share your experience and tell your friends and family about 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.
Ameriprise Financial Services, LLC. Member FINRA and SIPC.