To Rent Or Buy? There's More To It Than Money

By James E. McWhinney AAA

After you have thoroughly researched the financial issues of the rent-versus-buy decision, let's look at the issue from a different perspective, one involving emotional factors and personal preferences that collectively determine the impact of your decision on your quality of life. These "non-financial" issues are based on your personality, abilities and values. They require careful consideration, beginning with this question: what attributes about the place you live in are most important to you? (If you haven't yet researched the rent-vs-buy decision, see To Rent or Buy? The Financial Issues - Part 1.)

Environment: City Vs. Suburbs
The environment you choose to reside in plays a major role in your quality of life. Consider your personality. Do you like the character of the city, with its nightlife, quaint cafés and diverse cultures, or do you prefer the safety, conformity, green space and free parking in suburbia? Do you prefer to walk to work, take the subway or ride the train? How important is privacy, and how far do you like to live from your neighbors? If you can afford only those properties in environments that do not fit your preferences, you need to think about whether you are willing to forgo these preferences for the sake of owning a place.

Amenities versus Customization
Dollar for dollar, renting generally offers a substantially greater number and variety of amenities than buying. Consider, for example, the number of homes that come with an Olympic-sized swimming pool, clubhouse, tennis courts, basketball court and on-site gym. If you're looking to have these amenities in your private residence, get ready to spend a lot of money. Upscale apartment buildings, found in nearly every city, offer such options at a comparatively lower monthly rent than a mortgage for a property with the same attributes. On the other side of coin, there are affordable homes with private outdoor spaces that you can customize to your liking. There aren't many apartment buildings that come with acres of property in the country that will let you do your own landscaping, keep horses or grow a garden.

Flexibility Vs. Stability
Renting a place to live gives you significantly more freedom to get up and go at a moment's notice. The financial consequences of breaking a lease are minimal and can be addressed by simply writing a check. Homeowners wanting to leave their current residence face the much more complicated process of selling their property. The mortgage still needs to be paid and the grass still needs to get cut while you are waiting to find a buyer. Unless money is no object, the transition to a new place of residence is likely to take months, not days. On the other hand, with the flexibility of renting comes also some instability. The landlord can always raise the rent or ask you to move before you are ready to do so. If you own a house and make the payments, you can stay as long as you desire.

Personalized Aesthetics Vs. Less Work
Buying a house gives you the opportunity to choose a unique and distinct architectural style and to personalize it. But this freedom comes with the responsibility of keeping up with maintenance and repairs. Homeowners simply can't avoid the need to cut the grass and fix leaky faucets. If you prefer to spend your weekends relaxing in the park instead of wandering the aisles at the local hardware store, you might want to think twice about buying a home - unless of course you can budget a substantial amount of money to hire some help.

Although renting gives you no control over exterior aesthetics, you don't have to worry about dealing with wear and tear on your residence or problems resulting from bad construction. Renting still gives you plenty of opportunity to choose furnishings and decorate your interior environment in a manner that suits your style. And, as a renter, all you have to do when something goes wrong is notify your landlord.

Emotional Satisfaction Vs. Less Worry
Homeownership is often called "the American dream". There's just something emotionally appealing about putting down roots, getting involved in the community and having a place to call your own. Of course, homeowners also need to worry about the long-term character of the neighborhood and keep up with maintenance in order to sustain property values. If you're simply looking for a place to rest between days at work and nights hitting the town, renting may be the perfect answer. Just keep paying the rent and let somebody else do all the worrying.

A Personal Decision
Unlike the financial aspects of homeownership, the aspects that have a bearing on your lifestyle and values cannot be calculated online with some mathematical formula. If you can make the rent payments or qualify for the mortgage, you can live anywhere that you want to live. But buying a home is a decision you should take some time to consider, determining how its location, amenities and need for repairs will affect your lifestyle and general emotional satisfaction.

To learn more about the home costs, see Mortgages: How Much Can You Afford? and The Home-Equity Loan: What It Is And How It Works.

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