Should you rent or should you buy? You'll have to answer that question if you're moving out on your own after graduation. We'll discuss the advantages and disadvantages of both options.

Renters often pay far less for insurance than homeowners do and they don't have to worry about property taxes. Tenants do not have to handle property maintenance, although they may pay a monthly fee for upkeep. 

Another bonus of renting is that you have to sign only a one or two year lease so you can move more frequently if you want. That flexibility can be a great way for graduates to navigate the tumultuous employment market, as they can pick up and go where the new jobs are if need be.

Buying a home brings rewards as well. Purchasing can be an excellent investment, especially if you plan to stay in the house beyond five years. After that time, the cost of owning a home tends to be less than renting one. Mortgage payments begin to shift toward paying off principal, rather than just interest, and homeowners benefit from tax deductions that help offset their property taxes. If the market remains stable, the appreciation in home value could also help offset the initial cost of buying a home.

In addition to the long-term financial benefits, buyers also get to make changes to and decorate their properties however they wish. This is within reason, of course, as homeowners associations and local and state laws may dictate certain parameters. 

With that freedom also comes responsibility, however. Homeowners must maintain their properties. This means repairing major appliances; keeping the heating/AC, water and electrical systems functioning; and making sure the front yard looks acceptable. This upkeep brings unexpected expenses, so homeowners need to have a cushion of savings or these costs can severely strain their budgets. 

For more information about renting vs. owning, check out the Buy/Rent Calculator at The New York Times. CNNMoney also has an interesting article on the increase in rental agreements in the United States.


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