Is it Better to Rent or Buy? The Answer Might Surprise You

Sara Lindberg Updated on May 3, 2019

If you’re torn over whether to rent or buy your next home, you’re not alone. While being a homeowner has many benefits, home ownership is not necessarily the slam-dunk decision it used to be. 

It may be better to rent if you're planning to move within a few years, if you can't put down a sizable down payment, or if it would cost you less to rent a comparable home in your area. Let's dig in a little deeper. 


When you’re spending most of your income on your mortgage, property taxes, repairs, insurance, and Home Owners' Association (HOA) fees, being part of the American dream may not be all that it’s cracked up to be. 

On the other hand, it's hard to ignore the strong emotional pull many people feel toward home ownership. So how can you get a more a more detached and logical answer about the rent v. buy question?

Calculate the value of renting v. buying

Our pals over at The New York Times have created an interactive calculator that takes you through a series of steps to help you determine if you should rent or buy your next home. This is by far the best online mortgage calculator we've come across. 

This calculator takes away the guesswork and theoretical discussions about which option is best, and instead uses real numbers to help you decide. 

For example, if you’re looking at a house that costs $448,000, and you only plan to stay there for eight years, the tool will tell you if you can rent a similar house for less than you'd be paying for your mortgage. 

Not only does the calculator help keep a tally of the most common expenses of owning and renting, it also shows you what kind of return you could have earned if you'd invested rather than putting money toward a down payment.

If you don’t have a particular house in mind, take a look at your local real estate listings to get a sample home price for your area. You can use this as a starting point to get an idea of the value of owning a home vs. renting in your neighborhood. 

Then, use the calculator to help you analyze the pros and cons of each.

See also: Is a House a Good Investment? Pros and Cons to Consider

Imagine Life Without a Student Loan Payment... Start Saving Now!

What you need to consider before you make a decision 

Unlike online mortgage calculators that often only show you how much you’re likely to pay each month, this tool allows you to input variables including:

  • Cost of the house. Back in simpler days, this used to be the only thing that mattered. Now, it’s only one part of the puzzle.

  • How long you plan to stay. If you’re looking at buying a home for the short-term, you might be better off renting. The true value comes when you stay for an extended period of time.

  • Interest rates. The rates you lock-in at when you purchase make or break your monthly payment. Interest rates are expected to rise this year, so don't count on being able to refinance for a lower rate any time soon. 

  • Down payment. How much you can put down on a house will significantly impact your monthly payment and the terms of your loan.

  • Length of your mortgage. The longer the term, the more you will pay in interest. That’s why it’s important to know ahead of time if your goal is a smaller monthly payment (usually comes with a 30-year mortgage) or a higher payment and shorter length of time paying (15-year mortgage, for example).

  • Home-price growth rate, rents, and stock prices. This part of the calculator takes into consideration the home price growth rate, inflation, and investment return rate (if you end up renting instead of buying, the goal would be to invest the money you had saved for a down payment).  

  • Property taxes. If you’re going to own, you’re going to pay property taxes each year. Make sure you can afford them.
  • Closing costs. The amount you owe at closing can be significant and you can choose to either pay it in full or add it to the loan. 

  • Maintenance and fees. This is the one area where owning and renting are clear-cut. If you own, get ready to set aside a chunk of money to cover maintenance fees and any emergencies (such as needing to replace your entire roof). When you rent, you have a landlord to call who will take care of these expenses. 

  • Costs of renting. Remember that renting does include more than just your monthly payment. You have to account for a security deposit and renters insurance. 

What the calculator is missing

While this tool is helpful when looking at the raw numbers, it does not take into consideration the comfort that can come from owning your own home. For many, having a place to call your own is about pride and a sense of accomplishment. 

It’s also about having the piece of mind knowing that you can put down some roots and raise a family. This can be accomplished as long as you’re willing to only buy what you can afford — and possibly settle for a little less.

Are you considering buying a home? Do you need cash for your down payment? Refinancing your student loan can be a great way to free up some extra money. 

Published in: Financial Freedom

About the Author
Sara Lindberg

Sara Lindberg, B.S., M.Ed., is a freelance writer specializing in business, finance, health, and wellness. She holds a Bachelor's of Science degree in Exercise Science and a Master's Degree in Counseling. When she’s not writing, Sara can be found at the gym lifting weights, running the back roads to train for her next half-marathon, and spending time with her husband and two children. Read more by Sara Lindberg

Refinance and Save Today With These Lenders

#1 - Nitro Recommended View More Details

Special offers for medical resident and fellow refinance products

  • APR: 1.89% - 6.77%
  • Minimum credit score: 660
  • No Maximum when refinancing
View More Details
Visit Splash View Loan Disclosure

Splash Financial is a leader in student loan refinancing with new rates as low as 3.25% fixed APR which can save you tens of thousands of dollars over the life of your loans. No application or origination fees and no prepayment penalties. Splash Financial is in all 50 states and is intensely focused on customer service. Splash Financial is also one of the few companies that offers a great medical resident and fellow refinance product. You can check your rate with Splash in just minutes.

  • Low interest rates – especially for graduate students
  • No application or origination fees. No prepayment penalties.
  • Co-signer release program - you can apply for a cosigner release form your loan after 12 months of on-time payments
  • Specialty product for doctors in training with low monthly payment

Click here to see more of Splash's offerings and to see how you can save money.

#2 View More Details

Earnest empowers people with the financial capital they need to live better lives.

  • APR: 1.99% - 5.79%
  • Minimum credit score: 650
  • Refinance up to $500K
View More Details
Visit Earnest View Loan Disclosure

Using technology, data, and design to build affordable products, Earnest's lending products are built for a new generation seeking to reach life's milestones. The company understands every applicant's unique financial story to offer the lowest possible rates and radically flexible loan options for living life.

  • Commitment-free 2 minute rate check
  • Client Happiness can be reached via in app messaging, email, and phone 
  • No fees for origination, prepayment, or loan disbursement
  • Flexible terms let you pick your exact monthly payment or switch between fixed and variable rates
  • Skip a payment and make it up later
  • Online dashboard is designed to make it easy to apply for and manage your loan

Click here to apply with Earnest and to see how much you can save.

#3 View More Details

Operates in all 50 states; 2nd largest student loan refinancing lender

  • APR: 1.99% - 6.20%
  • Minimum credit score: 660
  • No refinancing amount maximum
View More Details
Visit Laurel Road View Loan Disclosure

Laurel Road is a national online lender with customers in all 50 states, the District of Columbia, and Puerto Rico. Many of our non-bank competitors are not able to lend in all 50 states.Laurel Road has grown to be the second largest player in the student loan refinancing space in large part because of our reputation as the go-to low rate provider.

Laurel Road Student Loan Refinance Review

  • National reach - Online lender that is available in all 50 US states, the District of Columbia and Puerto Rico.
  • No fees & the lowest rates in the space - Laurel Road is the most transparent about the rates they provide customers, and offer the lowest rates where it counts. Our customers will save more than $20,000 over the life of their loans on average. 
  • Customer service reputation - Laurel Road's customer service representatives are no rookies. With 19 years of experience on average, Laurel Road’s Customer Service team delivers an experience that is best in the industry. They work to build meaningful, life-long relationships with our valued customers to improve their overall financial wellness.
  • The stability & security of a bank - They are a division of Darien Rowayton Bank, a stable and secure FDIC-insured bank, regulated by the FDIC and the Connecticut Department of Banking.

Get your personalized, pre-approved rates in less than 5 minutes.

#4 View More Details

Credible is an online marketplace that provides borrowers with competitive, personalized loan offers from multiple, vetted lenders in real time.

  • Free to use, no hidden fees
  • Minimum credit score: 650
  • No refinancing maximum amount
View More Details
Visit Credible View Loan Disclosure

Credible is a multi-lender marketplace that empowers consumers to discover student loan refinancing options that are the best fit for their unique circumstances. Our integrations with leading lenders and credit bureaus allow consumers to quickly compare accurate, personalized loan options ― without putting their personal information at risk or affecting their credit score. The Credible marketplace provides an unrivaled customer experience, as reflected by over 2,000 positive Trustpilot reviews and a TrustScore of 9.5/10. Credible is headquartered in San Francisco, California.

For more information, click here to apply now with Credible.

  • Compare prequalified rates from multiple, vetted lenders in 2 minutes.
  • Refinance federal, private and ParentPLUS loans.
  • San Francisco-based customer support 7 days a week.
  • Checking your rates won't affect your credit score.
  • Get your final offer in as little as 1 business day.
  • Credible’s partner lenders do not charge prepayment penalties, loan application fees, or origination fees.
  • Free to use, no hidden fees: Requesting rates can take just minutes and costs you nothing.
#5 View More Details

For every loan they fund, they contribute to the education of a child in need

  • APR: 1.99% - 5.79%
  • Minimum credit score: 660
  • Refinance up to $500K
View More Details
Visit CommonBond View Loan Disclosure

CommonBond was founded in 2011 by three MBA graduates from the University of Pennsylvania’s Wharton School who wanted to help their peers escape from high-interest student loan debt. Its original focus was on grad students, but it has since expanded to cover undergrads as well.

Of all the companies we reviewed, CommonBond has some of the best customer service. The company prides itself on being easy to reach by email, phone, or live chat. It offers networking events, expert panels, insider newsletters, and even has a program help borrowers who lose their jobs to find new ones. CommonBond also makes you feel good about choosing to refinance with them by donating money to an education nonprofit for each loan they write.

CommonBond Student Loan Refinance review

  • Unemployment protections - If you lose your job or decide to go back to school, you can delay your payments for up to 24 months.
  • Social promise - For every loan they fund, they also contribute to the education of a child in need.
  • Hybrid loan option - Offerings include a 10-year hybrid loan with fixed interest for the first five years, and variable interest for the final five.
  • Referral bonus - For every friend you refer who refinances their loans with CommonBond, you’ll earn a $200 cash bonus.
  • Qualification - Borrowers must have graduated at least 2 years prior if they want to apply without a co-signer. And borrowers in 6 states – Idaho, Louisiana, Mississippi, Nevada, South Dakota, and Vermont – cannot currently refinance through CommonBond.

Get a personalized review of your refinancing options with CommonBond today.

#6 View More Details

Works with 300+ community lenders for higher approval chances

  • APR: 1.99% - 8.77%
  • Minimum credit score: 660
  • Refinance up to $300K
View More Details
Visit LendKey View Loan Disclosure

Connecting student borrowers to a network of over 300 community lenders with low interest rates. By partnering with these lenders, LendKey is able to give consumers direct access to the best rates available from the most borrower friendly institutions. As the servicer of all loans obtained through its platform, you can rest easy knowing your personal information will be safe and that the best customer service team will be ready to answer your questions from application until your final payment.

LendKey Student Loan Refinance review

  • Lightning fast rate check - 2-minute rate check with no impact on your credit score
  • More lenders, more options - see the best offers from over 300+ community lenders for higher approval chances
  • Life of loan relationship - With LendKey, your personal information will never be sent or passed on to third parties. Their customer service team is with you from the moment you land on their website until you've completely repaid your loan.
  • Unmatched benefits- Community lenders put people over profits and offer unique benefits like cosigner release after 12 on-time payments, interest only repayment options to keep monthly payments low, the largest unemployment protection period in the market, and more.

Get a personalized quote from LendKey now.

#7 View More Details

Many ELFI customers save hundreds per month month and thousands over the length of the loan term.

  • APR: 2.39% - 5.99%
  • Minimum credit score: 680
  • No refinancing maximum amount
View More Details
Visit ElFi View Loan Disclosure

Education Loan Finance is designed to assist borrowers through consolidating outstanding education loans into one single loan that effectively lowers your costs of education and/or makes repayment very simple. Education Loan Finance - backed by the strength of SouthEast Bank - combines the benefits of traditional education loan refinancing with the superior products, service, and support found in the private market.

Education Loan Finance (ElFi) review

Check out their low rates today to see how much you can save.

  • Get Your Rate. With Education Loan Finance's Find My Rate tool, you can complete a short application to receive a preliminary quote on your eligible rates and terms, all without affecting your credit score.
  • Apply in Minutes. Education Loan Finance's online application is fast and simple.
  • Outstanding Personalized Service. Our Personalized Loan Advisors specialize in student loan refinancing and help busy professionals find the option that's right for them.
  • Student Lending Experience: Education Loan Finance isn't a start-up company - we have a longstanding history and expertise in serving student loan borrowers.

Attractive Bonus and Referral Programs:

  • Education Loan Finance Referral Program**: Earn $400 for each new Education Loan Finance Client referred by you!

I reduced my student loan payment by $152 per month, by refinancing thru Nitro:

Save Money Now