Renting and buying a home

Housing is usually a household's biggest expense, and a common guideline is to keep it to about 30 percent of income or less. Renting offers flexibility, lower upfront costs (often a security deposit and first month's rent), and a landlord who handles most repairs, but renters build no ownership and rent can rise; a lease is a legal contract, and renters insurance protects your belongings. Buying a home builds equity, the part of the home you own outright, but requires a down payment, often from 3 to 20 percent of the price, plus closing costs, and a mortgage, a loan secured by the home and commonly repaid over 15 or 30 years. A fixed-rate mortgage keeps the same interest rate, while an adjustable-rate mortgage can change. Owners also pay property taxes, homeowners insurance, and maintenance, and if they cannot make mortgage payments, the lender can foreclose and take the home. Whether renting or buying is better depends on your finances, plans, and local housing prices.

This explanation is AI-generated and can occasionally be wrong. 🚩 Report