Do a quick Google search on the term “rent prices” and you’ll see headlines like “The middle class is struggling to make the rent” and “Rent inflation shows no signs of letting up.” At the same time, the headlines on home buying read “Home Sales Surge as Prices Pick Up.”

So let’s get this straight, rent prices are up and unaffordable, but home prices are also increasing – what’s a person to do? If you’re trying to decide whether to renew the lease at your rental or sign up for that 30-year mortgage – read on to help you make that decision.

Consider the Upfront Costs

When you rent an apartment or home, you may have to come up with first and last month’s rent, a security deposit, a pet deposit (if you have one) and renters insurance. That may seem like a lot, but when buying a home, there are seemingly endless costs, such as agent fees and inspection fees and a down payment, just to name a few.

Not sure which option you can afford and which makes the most sense financially? The New York Times shared an excellent tool for determining whether to rent or buy – a calculator that takes the most important costs associated with buying a house and computes the equivalent monthly rent.

Location is Everything

Depending on where you are in the U.S., different regions are better for renting and others are better for buying. If you’re living in major cities in California or New York, the decision between buying and renting might be tough. Conversely, small cities in those same states might have some of the lowest prices for buying a home. If you’re deciding whether to buy based on the best value for your dollar, do your research on the cities surrounding your ideal location.  Looking for homes in gentrifying areas is also a good way to lower your costs (just make sure you factor in transportation).

How Responsible Do You Want to Be?

In an apartment or rented home, if the HVAC goes out – you simply call the maintenance person or landlord and request that it be fixed. If the same issue occurs in your purchased home, you’re stuck with figuring out how (or who to hire) to fix it and ultimately must pay a hefty bill. At the same time, as a renter you’re subject to the rules of the landlord. For example if you want to paint the walls, you might have to ask permission first. In your own home, you can decorate and live however you’d like.

Consider the Flexibility (or Lack There of)

As a renter, you can pick up and leave whenever you feel like it. Well, you might have to pay a fee for breaking your lease, but you get the idea. As a homeowner, you aren’t nearly as flexible as leaving would mean selling or finding renters and all the work that goes with that. When deciding whether to rent or buy, think about your job stability and future plans to make sure you won’t ever need to move out too quickly.

Understand the Rewards

Renters aren’t responsible for property taxes, homeowners insurance or maintenance costs. Homeowners however, get to build equity and can use that equity to upgrade their living space, build wealth or for large expenses such as college. Homeowners can also deduct mortgage interest from their taxes and are also working towards having a home that’s theirs to keep.

Still unsure whether to rent or buy? Realtor.com put together a similar calculator to the The New York Times one above, but this one allows you to enter your location, desired home price and desired rent price to help you make the decision.

There are pros and cons to both renting or buying your home, so doing your research and considering your current needs and future plans is key to making the right decision for you and your family. Best of luck in finding your next home!

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