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Rent VS Buy
There are many advantages to buying a
home versus renting one. View these advantages in the Buy vs. Rent
Comparison Chart.
Savings: Buying
In many cases, the amount of money a renter
spends on rent can be about the same as or less than the amount a
homeowner spends on a mortgage. With the tax benefit for homeowners, the
savings can be significant.
Rent vs. Buy Sample 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 |
Monthly Expenses: Buying
Your rental company takes part of your rent payment to cover
certain housing expenses. When you decide to purchase a home, you accept
responsibility for paying for these expenses (listed below). They are
additional costs to your monthly mortgage payment and should be included
in your budget estimates:
Property Taxes and Special Assessments
Home/Hazard Insurance
Utilities
Maintenance
Home Owner Association (HOA)
Fee (Doesn't apply to all purchases).
Membership Fee: It may pay for recreational facilities and other
services (cable TV).
Advantages of Buying vs. Renting outlined:
| |
Advantages |
Disadvantages |
|
Buy |
|
Property
builds equity |
Responsible
for maintenance |
|
|
Sense of
community, stability, and security |
Responsible
for property taxes
|
|
|
Free to
change decor and landscaping
|
Possibility
of foreclosure and loss of equity |
|
|
Not dependent
on landlord to maintain property
|
Less mobility
than renting
|
|
Rent |
|
Little or no
responsibility for maintenance |
No tax
benefits |
|
|
Easier to
move |
No equity is
built up |
|
|
|
No control
over rent increases |
|
|
|
Possibility
of eviction |
|
|
