Rent vs. Own

the Right Time to Buy a Home

Deciding whether it’s better to rent or buy a home is not as simple as comparing monthly payments. There are many factors that go into calculating how much you pay when you own a home rather than rent one.

The cost of buying a home is based not only by the local housing market but also by your current financial situation, career prospects and life goals. It's important to take all factors into consideration when deciding to become a homeowner. 

The costs of renting a home

It is often easier on a practical level to rent a home instead of buy one. Financial and credit requirements are looser, with less money paid upfront at move in. It is also easier to move from place to place when renting, since you won't need to sell your home when you leave. And as a renter, you're free from dealing with building repairs or maintenance. 

But your monthly rental payments won't go towards building personal wealth since you don't own your unit. For example, you won't be able to sell your rental unit for cash should you need the income. 

And as a renter, signing multiple short-term leases rather than one long mortgage contract leaves you open to rent increases each time you renew or sign a new lease. You'll also face restrictions on decorating, smoking, pets and other lifestyle choices.   

Pros of renting

  • Fewer home maintenance duties and costs

  • Easier to move

  • Looser credit requirements

  • Lower upfront costs

  • Lower reserve fund requirements

Cons of renting

  • Unpredictable rent increases

  • Not building equity

  • No tax benefits

  • Restrictions on remodeling/decorating

  • Non-refundable fees for security, pets, cleaning and other services

The value of buying a home

Owning a home is a big responsibility, which is why mortgage lenders have stricter credit and financial requirements than landlords. To be approved for a mortgage loan, you'll need to have good credit and money saved for a down payment. 

Homeowners not only have to pay the monthly mortgage, but also make any and all building repairs, no matter how big or small. Owners also risk losing equity in their homes when local real estate values go down. 

While home ownership isn't ideal for everyone, owning a home reaps more financial rewards than renting the longer you plan stay in your home. This is due to rising equity and inflation rates lowering the balance of your loan over a long period of time. 

Homeowners may also enjoy end-of-year tax benefits such as the homestead exemption, mortgage interest and property tax deductions (Consult with your tax advisor for details) And with no landlord to answer to, you'll be free to remodel and make improvements to increase your home's overall value.

Pros of owning

  • Gain equity
  • Stable monthly payments
  • Potential rental income
  • Free to decorate or remodel at will

Cons of owning

  • Difficult to move/sell
  • Perform home maintenance
  • Requires large down payment and closing costs
  • Can lose value in a down market
  • Requires good credit
  • Large cash reserves needed

Be sure to consider all factors when making the decision to become a homeowner.

Questions? We've got answers

The decision to buy a home depends greatly on where you are in life financially, personally, and professionally. BECU mortgage advisors can talk through whether buying a home makes sense for you. 

Make an appointment online, call us at 800-233-2328, or visit us in person at any BECU neighborhood financial center.

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