When you buy a home, you pay for things you don’t have to pay for as a renter: loan interest, property taxes, insurance, and even maintenance and repair costs. That’s part of the argument in favor of renting: there are so many additional costs and factors that get overlooked. That goes for both sides, and the details vary depending on the situation. Here are a few commonly overlooked factors:
- How long we live in the home? Generally, the longer you’re in the home, the better because your costs are spread out over time.
- The cost of housing in your area. It just depends on the market area that you are looking in. If running is extremely costly it might be more affordable to buy a home.
- The opportunity cost of your taxes and insurance. What kind of long-term return would you get if you invested this money in the stock market or even a high-interest savings account or CD.
- The opportunity cost of your down payment how much other return could you get if you invested that loves son instead.
These are just a few factors and they are still far from conclusive in either direction. It’s impossible to say renting or buying is a better decision for everyone because of all the different factors. Each decision is an individual and unique situation.