To Rent or Buy a Home? 4 Factors You Need to Consider

To rent or to buy? It’s a question most consumers ponder at one time or another, yet the correct answer varies as much as individual life circumstances do. While your financial state is a major factor, it’s not the only factor you need to consider. Let’s take a look at the big picture:
Financial Readiness
Are you prepared financially to purchase to home? Your ability to make a monthly mortgage payment is only one aspect of financial readiness. You also need a large down payment and a good credit history if you plan to take out a loan. There are other housing costs to consider as well, such as utilities, insurance, repairs and maintenance, and possibly HOA fees.

Additionally, you shouldn’t drain an emergency savings fund to support the down payment of your home. An emergency fund with three to six months of living expenses can become essential at a moment’s notice, whether you own a home or not.

You must also take your personal debts into account. Your monthly debt payments should not exceed 15 percent of your gross income. If you are financially prepared to purchase a home, there is a great tax advantage. You can deduct mortgage interest, private mortgage insurance and property taxes, potentially saving you thousands of dollars a year.

To learn more about your individual situation, check out our To Rent or To Buy calculator.
Personal Readiness
Before purchasing a home, you need to take your goals, values, needs and wants into account. Homeownership may offer a sense of pride, independence and stability. However, there is greater responsibility than renting. In addition to reaping the benefits, homeowners assume all risks. They are responsible for all repairs and maintenance, and they take the risk their investment may not turn as planned if the real estate market swings.

Carefully examine your needs and wants, and those of your family. Your personal readiness will likely fluctuate with your life circumstances.
Real Estate Market
The real estate market can have a large impact on whether you should rent or own. Look at current prices, as well as the history of purchase prices in the areas you would like to buy. Ask yourself: is it a wise time to buy, based on your current needs, wants and goals? Are you likely to get a better or worse deal if you wait a few months, or even a few years?
Location, Location, Location
The adage is true; it’s all about location. If you are ready to buy, is an affordable home available in your desired neighborhood(s)? If so, you may want to jump on it. If not, you may want to wait it out, even if other factors point to buying now. A home is a long-term commitment. If you can’t see yourself in a specific home or neighborhood for at least three to five years, renting may be in your best interest until the right home becomes available.

Additionally, if you don’t know where your job or family circumstances may take you in the next several years, renting can offer flexibility that homeownership can’t. Those purchasing homes should be confident in the location, property type and available amenities.

How Much Rent Can You Afford?

While choosing to rent where you live isn’t as significant a financial decision as buying a home, it certainly one that impacts your finances and quality of life. Renting is a great option if you’re on your own for the first time, if you have a job that involves frequent travel and relocation, or if you’d simply rather avoid the financial and time commitments buying a house requires. But just as buying too much house can lead to being “house poor”, committing to a lease with rent that’s too high can also leave you financially strapped. take a look at these tips to help you determine how much rent you can afford. 
Determine Your Needs- Beyond having a roof over your head in a safe neighborhood, determine exactly what you need from where you live. Fancy amenities are fun, but all those extras can cause rents to rise. If you’re someone who’s always on the go and does little more than shower, sleep and eat at home, you can get by with smaller, more humble surroundings. Conversely, if you’re a homebody who spends hours nesting and watching Netflix, you might want a little more breathing room. Add Up Your Income- Before you decided how much you can afford to pay in rent, you have to know exactly how much money you have coming in. Add up your salary, anticipated bonuses, support payments, and any additional income from freelance work or side gigs. If your income is entirely commission-based, use last year’s total (even if you expect to make more) as a guide. 
Follow the 30% Rule-  Most experts agree that rent should account for no more than 30% of your total income. Now, that’s not to say it needs to be exactly 30%, it just shouldn’t be more. Try to find rent that rings in at less than that if possible. 
Find Out About Fees- Before you sign on the dotted line, be sure you find out if there are fees you’ll be responsible for in addition rent. These can include (but are not limited to) utilities, water and sewer fees, trash pickup, parking, or community upkeep fess. 
Use Amenities to Cut Costs- If you choose to rent in a community that has a special amenities, such as a gym or pool, use them to your advantage to cut costs. Using on-site workout facilities means you can quit paying to go to the gym. Taking part in movie night or other social gatherings will reduce your entertainment costs. Participating in community potlucks or happy hours can help you save on food. 
Keep an Eye on Your Goals- Renting offers a sense of freedom you don’t get when you’re paying down a mortgage. But that doesn’t mean you should’t keep your long-term financial goals in mind while you rent. If your ultimate goal is saving for a down payment on a home, be sure you’re putting money away for that, as well as saving for emergencies and retirement (it will be here sooner than you think!). 

Money-Saving Tips for Renters

Whether you are rending your first apartment, renting while saving up for a home or simply prefer the convenience and freedom of renting where you live, you are in good company. According to the National Multifamily Housing Council, more than 100.8 million American Households rent their primary residence. If you are among that group, check out these money-saving tips for renters:
Negotiate- Before you sign a lease, see if the landlord is willing to negotiate the monthly rent. Quite often, committing to a longer lease (12 months vs 6 months, for example) can be enough to get rent reduced. If they are absolutely not willing to budge on the monthly rent, ask if there is a chance to receive free utilities, additional storage space or garage parking.Split the Costs- One tried-and-true method to reduce rental costs is to split them with a roommate (or two). Having roommates can yield huge cost savings, but it wont be worth it if you have completely dissimilar lifestyles or different expectations of the roommate partnership. Interview potential roommates much the same way you would interview job applicants, including asking for references from past roommates and landlords. Also be sure to check the terms of your lease to ensure you don’t exceed the maximum number of residents allowed.
DIY Décor- Since any rental situation is ultimately temporary, you don’t want to spend a fortune decorating your place- and you don’t have to. Check Pinterest for easy and cool decorating ideas you can replicate for next-to-nothing. Keep any eye out on Craigslist and Facebook for freebie hand-me-downs and scout local thrift stores for deals on furniture, wall art and knick-knacks. Sometimes all it takes is some sandpaper, spray paint and a Saturday afternoon to transform cheap finds into one-of-a-kind treasures.
Get Renter’s Insurance- While it is an additional monthly expense, it is a small one, and well worth it. In fact, many landlords now require proof of renters insurance before allowing a renter to even sign a lease. According to the Independent Insurance Agents and Brokers of America, the average cost is only $12 a month for $30k of property coverage and $100k of liability coverage- That is just $144 per year. It is a small price to pay for peace of mind.
Take Advantage of Amenities- Whatever you can do or get as part of your monthly rent, stop paying for it elsewhere. For example, if your complex has workout facilities and/or a pool, quit paying for a gym membership and use the one in the community instead. If they host movie nights, pizza parties or other community activities, attend those and skip spending the money on a night out.
Refer Friends- Check to see if your complex offers renters credits for bringing in qualified new renters and if they do, start referring friends! You will not only get a nice break on rent, you will start to build a community of people you already know and like.
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5 Things You (Probably) Didn’t Know You Can Rent

Most of us have rented cars and hotel rooms, but what about renting textbook, fitness equipment or even Legos? There are many things available to rent that you have probably never considered, but renting rather than buying an be a real money saver; especially for things you only use occasionally. You should also consider renting as a way to try before you buy when contemplating a large purchase.
Take a look at this list of things you probably didn’t know you could rent.
Sports and Fitness Equipment- We have all heard about (or seen in our homes) the treadmill or stair stepper that slowly morphs into a very expensive clothing rack. Instead of getting stuck with a piece of pricey fitness equipment that might not be right for you, try out a few different varieties by renting them first. Many retailers also offer sports equipment to rent. Renting rather than buying gives you the freedom to find an exercise or sport you know you will keep doing, even after the novelty wears off.Textbooks- Buying books can take up a huge chunk of a starving students budget. And with publishers constantly pumping out new editions, they typically lose a good chunk of their worth over the course of the semester, so selling them back doesn’t do much good. Next semester, try renting your textbooks. Renting can save you up to 70% over purchasing. Visit to learn more.
Lego Sets- You read that correctly. You can actually rent Lego sets for your kids rather than buying them. The advantages are many: less initial cash output, more variety and you’re not stuck with bins and bins of Legos taking up valuable storage space. You can try the Lego rental service free at
Camping Gear- Let’s go camping! It sounds like a great idea. Until you realize you don’t have a tent, or a camping stove, sleeping bags, or anything else you need to make camping fun and safe. Buying all of it at once could set you back hundreds of dollars. You’re better off renting it the first time you go, then deciding if it is something you will do often enough to warrant investing in your own equipment.
Wedding Dresses- While renting the groom’s tuxedo has been a common practice for years, the bride is expected to walk down the aisle wearing a dress that she paid hundreds- if not thousands- of dollars for. A dress she will never wear again, and that will most likely go into storage forever. Instead, rent the dress for a fraction of the cost and spend the money on the honeymoon. Check out or to see the huge range of styles available.
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