Rent vs Buy

Should I Continue to Rent or Buy?

Whether renting is better than buying depends on many factors, particularly how fast prices and rents rise and how long you stay in your home.

Below are some questions you should ask before making your decision to purchase:

Reasons to Rent – Pros

  • Affordable
  • Enables ability to build payment history/good credit
  • Ability to save money
  • Flexibility of moving
  • No property taxes
  • No building maintenance
  • No foreclosure Risk

Reasons Not to Rent – Cons

  • Rent payments never acquire equity position
  • No tax advantages
  • Little or no control over how much rent you pay
  • Stubborn Landlord who doesn’t take care of problems
  • Rent payments only buy shelter, one month at a time

Reason to Purchase – Pros

  • Build equity in your home with each mortgage payment
  • Given time you home should appreciate in value
  • Advantageous tax benefits, mortgage interest and property deductions
  • Choosing a fixed rate mortgage payment  stabilizes finances and is not affected by inflation
  • Free to change wall coloring, décor and landscaping to suit your tastes
  • First time home buyer programs available
  • Builds wealth over time with increased equity and value
  • Builds strong community ties and involvement

Reasons Not to Purchase – Cons

  • Need money for down payment and closing cost
    (we can help you here)
  • State, county, school taxes
  • Harder to move or relocate
  • Must factor in home maintenance
  • Could lose equity in a down real estate market
  • Could face foreclosure if something happens to job or health
  • You must pay your own utilities (if not now), which may include: gas, electric, water, sewer
  • Home Owner Association dues or Condo Fees

 

Check out this calculator to compare the advantages of owning vs renting:

CLICK HERE

Buy vs. Rent Comparison
The chart below shows a cost comparison for a renter and a homeowner over a seven year period.

  • The renter starts out paying $800 per month with annual increases of 5%
  • The homeowner purchases a home for $110,000 and pays a monthly mortgage of $1,000
  • After 6 years, the homeowner’s payment is lower than the renter’s monthly payment
  • With the tax savings of homeownership, the homeowner’s payment is less than the rental payment after 3 years

Years

Rent Payment

Mortgage Payment

Monthly Difference

After Tax Savings

Yearly Difference

After Tax Savings

1

800

1000

-200

-50

-2400

-600

2

840

1000

-160

-10

-1920

-120

3

882

1000

-118

+32

-1416

+384

4

926

1000

-74

+76

-888

+912

5

972

1000

-28

+122

-336

+1464

6

1021

1000

+21

+171

+252

+2052

7

1072

1000

+72

+222

+864

+2664

8-30

Savings increase every year

Source GinnieMae.gov

Wow, there is a lot to consider when buying a home.  Rest assured, if you are on this page right now you are on the right path.  Please feel free to let us know if you have any questions.

Still have questions?   Just give us a call at (302) 266-9500 or simply click the button below.