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How to Choose Between Renting an Apartment and Buying a House
by Ruby Bayan

Rent or Buy a Home? Renting an apartment is trouble-free living because the landlord takes care of the integrity of the residence and its surroundings. Buying a house, on the other hand, is the American Dream of stability, pride, and the joys of ownership.

How do you choose which option is best for you? Here is a decision process that could be helpful.

Step 1: Do Your Homework

What you'll need:

Pay stubs
Credit card receipts
The Internet
The Sunday Paper

What to do:

1. Determine your cash flow situation. How much is your take-home pay? How much do you spend on utilities, insurance, car payments, and credit card debts? It helps to know what you can afford in terms of monthly payments for your place of residence, whether it's rent or mortgage.

2. Find out what your credit rating is. Check with your bank, in case they offer the service of checking your credit rating for free. Technically, everyone is allowed to check credit scores free at least once a year. Knowing your credit standing helps you plan for major decisions like buying a home.

3. Check the Sunday paper classifieds or the Internet for what's available out there. Knowing how much square footage rents, or sells, at your preferred neighborhoods, always helps you form informed decisions regarding your dwelling.

4. Network with friends and coworkers. Ask around for good deals, referrals and advice. People love to tell stories about how great their apartment complex is, or how wonderful their realtor or mortgage lender is; it helps to note down these vicarious experiences for reference in your decision process.

Helpful Tips:

Weigh your options whenever you can; renting may seem like a cheaper option, but at some point, buying a home could be more cost-effective. For example, if your landlord raises your rent every year, maybe next year's rent would be just about the same as mortgage for a house you can call your own.

Step 2: Make An Honest Assessment of Your Situation

What you'll need:

Pen and paper or journal

What to do:

1. Answer these questions about your lifestyle:

a. Do I have the time and inclination to tend to my own lawn or yard?
b. Would I rather call a landlord to fix a leaky faucet or a broken appliance, or can I take care of it myself?
c. Do I see myself staying in one place for many years (therefore, consider buying a house), or do I want to have the option to just pack up and leave anytime I please (therefore, prefer to rent and be more "portable")?
d. Do I want to have the freedom to design, decorate and renovate my living space, throw a boisterous party anytime I want, and raise as many pets as I can afford (therefore, a single family detached dwelling would be the answer)?
e. Do I want a spacious private garage, plus a sprawling backyard for a vegetable garden, which most rental places don't offer?
f. Do I really want to pay property taxes, broker's commissions, inspection and appraisal fees, title insurance, and transfer taxes?
g. Is it time to invest in a home and possibly earn equity?

2. Answer these questions about your finances to see if buying your own home is a viable option:

a. Can I afford to pay monthly for the home loan, taxes, insurance, homeowner's fees, and the additional expenses on un-subsidized utilities?
b. Do I have enough savings to dip into for home repairs and emergency maintenance calls?
c. Do I have a source of income that is stable enough to pay for home ownership for years to come?


Homeownership is a serious, long-term financial commitment. Be sure all your bases are covered. Ensure that your cash flow is steady and secure, and that your income can address your financial obligations today and tomorrow.

Not all housing investments end up in positive equity. Depending on the location of the house, the appraised value of the community, and the housing market trend, homeowners can either gain or lose money on their property.


NCSU: Should You Buy or Rent?
Move.com: Rent vs. Buy

Contributed to eHow.com by Ruby Bayan, Home & Garden Topic Expert 2007-2010

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