Renting vs. Owning
Why Rent when you can OWN?
This is an incredible time to buy with all the foreclosed properties. Here is the golden opportunity for you to choose the house that you want to buy. Start building equity and enjoy all the tax benefits home ownership brings. Home ownership for the the first time home buyer is now affordable, and easier than ever.
Many renters think they can't afford to buy a home. They could be wrong.
In the previous real estate market, homes for sale were way above a first time home buyers reach. Many first time home buyers found themselves needing to bid above asking price; therefore, finding themselves pushed out of the bidding wars because they didn't have sufficient down payment, or any in some cases.
With the recent market correction, homes have become affordable and within the reach of the first time home buyer. The number of homes on the market is driving sellers and lenders to offer incentives to buyers; such as help with closing cost, down payment assistance, and offering home warranties. With prices at an ultimate low, first time home owners are finding themselves within reach of owning their own dream home.
Buying vs. Renting 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 homeowners payment is less than the rental payment after 3 years and depending on your tax bracket may be even less.
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| 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 | Â | Â | Savings increase each and every year | |||
