The Real Difference Between Rent and a Mortgage Isn't What You Think

The Real Difference Between Rent and a Mortgage Isn't What You Think

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Taryn Williford
Dec 7, 2017
(Image credit: Marisa Vitale)

Were there an Apartment Therapy Magic 8 Ball, I bet it would get sick of answering the question "Is is better if I rent or buy?"

The truth is, there is no one-size-fits-all answer. The decision comes down to a few oft-cited things, like the market where you live and your personal financial situation. But there is one big piece of the puzzle that doesn't get its due.

Tip: This years-old New York Times "Is it Better to Rent or Buy?" page is still the gold standard in real estate lifestyle calculators. If you haven't played around with that worksheet yet, give it a try.

You need to consider your appetite for risk.

If you're on the "should we or shouldn't we" (and "can we?") road to homeownership, in between moments of weighing finances and market trends, you should take a moment to consider your personal appetite for risk. It's an equally important factor that'll help you determine if you'll be happier as a homeowner or a forever renter.

Think about it: Even if the paper dollars are equal between renting and owning, the lifestyles are totally different. And it comes down to risk.

Renting is a risk-free lifestyle. Crappy landlord? You're less than 12 months from never having to deal with it again. There are legal protections in place to ensure that a broken roof or gas leak don't leave you bankrupt and homeless. You're always free to find a better situation for yourself.

If you own your home, you open yourself up to a ton of risk. Taxes can change quickly—hell, the tax code can change overnight (like literally at 2 AM one night). Things can break and force you to fund repairs and replacements. And even in a condo, your homeowner's association fees can be hiked up month-to-month and special assessments passed with a majority vote.

Sure, in a rental you can still be surprised with expenses and increases. And it may cost more (or rather, pay off less) in the long run, but part of the premium you're paying for in being a life-long renter is being able to live without risk—financially and emotionally.

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