Mortgage vs Renting Pros and Cons

There are a number of factors that go into deciding whether it is better for your current circumstances to rent or buy property.  Some of these include age, health, family, marital, and employment status.  There is no clear or universal choice.  Each decision is based on how the advantages and disadvantages affect you.  Here are some things to consider.

  • Cost – This is one of the primary concerns.  Renting can come with some upfront costs, like a deposit against damage, first and last month rent, etc.  But, overall, these amounts are far lower than down payments, closing costs, insurance, etc.  The rental costs are set in the terms of the lease.  Depending on how the agreement is written, they will be firm for the term, but can be raised at renewal.  Generally, monthly rent is lower than a monthly mortgage payment, but in recent times, this is not necessarily true.  Utilities can be included in the monthly rental fee, or you can be responsible for them on your own.  However, an apartment is considerably smaller than a house, so if you go that route, you will have a smaller outlay.
  • Maintenance and Repairs – As a homeowner, you are responsible for all the upkeep, including mowing, snow removal, and generally keeping a tidy piece of property.  This also includes repairs when something goes awry, like storm damage.  This can also include improvements like fencing, landscaping, remodels, etc.  As a renter you just call the landlord.  You won’t need to search for a repair person, get estimates, or deal with the stress of finding the unexpected need for cash.
  • Flexibility – As a homeowner, you can decide whether to make changes in the rooms, get a pet, or upgrade appliances.  In a rental situation, you need permission, which may or may not be granted at the landlord’s discretion.  If you work at a job that requires significant travel or relocations, you need to consider the ability to sell or maintain any property you own.  As a renter, you may also be obligated through a firm lease and may or may not be able to sublet the space.  However, you are also at the mercy of a landlord who decides to sell the property, and you need to renegotiate the deal or move with little notice.
  • Investment – We all know the scenario of throwing away money on a rental versus building equity in a home. 

Making Informed Choices: The 5% Theory and Beyond

As you can tell, there are no easy decisions.  However, there is a 5% theory.  That is comparing 5% of a home’s value to the annual cost of rent at the going rate.  This is a numbers game and does not take into consideration the emotional factors involved.  It also does not consider the economic conditions in your area, the availability of good housing, rental or owned, and the recent increase in rental rates or mortgage interest. 

If you are on the fence, talk with experts at  They discuss these issues with individuals and families, just like you.  They can provide inspiration and solid facts to help you make the best decision.  If you decide to buy, they can also provide invaluable guidance on the paperwork and finding an appropriate lender.