Determining whether to buy or rent your home involves a complex decision-making process. TheSmartAsset rent vs. buy calculator helps you see when you’ll reach your break-even point and integrates some of the following questions to help you make an informed choice:
How long do you plan on staying in an area?
How much flexibility do you enjoy?
Are you prepared for the responsibility of homeownership?
Perhaps the most important factor to consider when making this buy or rent decision is how long you plan to stay in your home. If you’ll only be in town a year, renting will almost always be your best choice. In that scenario, if you’re planning to pack up and leave in the short term, you probably don’t want to spend the time and money necessary to buy a house, with adown payment,closing costs, loan charges, appraisal fees and so on.
All told, the upfront costs of finding a house and taking out a mortgage can be in the tens of thousands of dollars (or higher). As a renter, by contrast, you’ll likely just have to pay an application fee, fork over a broker’s fee and make a refundable security deposit of a few months’ rent.
On the other hand, if you plan on staying put for 50 years, renting could be more expensive than buying over that time frame. In the long run, there are significant advantages to homeownership. You’ll own property, which you can later sell, rent out or pass on to family members down the line. Another possible advantage ismortgage interest deduction, a tax benefit that allows you to deduct mortgage interest payments from your taxable income. This requires filing itemized taxes and is only beneficial if the interest deduction totals more than thestandard deduction.
Rental payments, by contrast, have no such advantages. While a portion of each mortgage payment goes toward raising your stake in your home by increasing your equity, rental payments go entirely to your landlord and tend to grow over time as rental prices increase. In the long run, the costs of renting can be much higher than buying.
SmartAsset’s interactive buy vs. rent map highlights the places where buying a home is better than renting based on the number of years you plan on staying in your home. The top 10 counties identified below are those places where buying becomes a better financial option than renting in the shortest amount of time.
Find a great interactive map of Minnesota bu county on where it is smart to rent or buy