State Treasurer of Iowa

Tip from the Treasurer: Moving in 2016? Weigh the Options of Renting vs. Buying

A new year can mean a new you, but it may also mean a new home. For those who find themselves moving across town or across the country in 2016, the number one question may be whether to rent or buy. Approach this financial decision by considering the following:

  • Length of Time: Most experts recommend purchasing a home when the buyer plans to spend at least five years in it. Mortgages are designed so that the monthly payment in the first few years of ownership pays more of the loan’s interest than its principal balance. This changes after about five years, so that the monthly payment pays more of the principal, thereby decreasing the loan amount itself. Owning becomes a better deal than renting for those who stay in a house longer.
  • Job and Life Stability: Renting is a much more viable option for people who find themselves in a new career or often transitioning between cities. Many renters choose not to buy in order to save money for a down payment and the additional costs of owning their future home. 
  • Overall Cost: Homebuyers usually need to save between five to 20 percent of a home’s sale price to qualify for a loan. Closing costs, real estate commissions and property taxes are factored into the final sale. Budgeting for home maintenance and unexpected repairs is also a key consideration when determining whether to rent or own.

For more information on determining whether to rent or buy, visit or

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