In most people's lives, you usually come to point where you wonder if it is better to rent or to buy a home.  It might not always be readily apparent which is the best option.  In most cases it depends alot on your particular circumstances and the state of the housing market in your area

As many people discovered when the housing market bottomed out after 2008, owning a home isn't always the best option.  Home values decreased substantially, leaving many homeowners owing more on their home than its current worth

So what's the best option for you?  Here's what to consider:

The Pros of Renting


One upside of renting is that you'll pay less up front.  Typically it will include first and last month's rent and maybe a security deposit if you have a pet.  Buying, on the other hand, means you need to be ready to put down a large down payment and pay for other costs such as a home inspection.  The difference between renting and buying in this case can mean thousands of dollars.  The money that you save by not buying can then be used for other investments, such as the stock market.  These investments could get you a better return than a house in the long run

If you think you might change jobs or move in the near future, renting is the best way to go.  It gives you freedom and flexibility that owning a home doesn't.  Likewise, if you think your income may change substantially, renting is the best option.  You don't want to find yourself in the position of not being able to pay your mortgage down the line

Renting also gives you time to establish credit, and you're not responsible for any repairs that are needed, such as a leaky faucet.  You might even luck out and find a rental that includes incidental expenses such as heat and hot water

The Pros of Buying


If you're renting it means you don't own the property.  But owning, and having a mortgage, gives you the opportunity to build equity in your home.  This then gives you the ability to borrow against your equity for large purchases and to refinance at a more favorable rate

Buying also gives you tax deductions not afforded to renters, such as mortgage interest and property taxes.  And in some cases you may even avoid the capital gains tax when you sell.  And if you work from home, you can make deductions for your home office

If you like to have control of your surroundings, you're better off buying.  Renting limits what you can do in terms of painting, decorating and upgrading.  If you own, you can do whatever you please.  You also have a pride of ownership that is missing when you simply rent a property

The Bottom Line


So what's the best choice?  It really depends on your personal tastes, goals and financial situation.  By taking the time to understand the pros and cons of renting verses buying, you'll be sure to make the choice that is best suited to your circumstances.