Which is Better: Renting or Buying a Home?
When is the Right Time to Buy?
The combination of good prices and low mortgage rates make it considerably less expensive to own than rent in most markets. Assuming a person is qualified with a down payment and won’t be moving for several years, there may never be a better time to buy a home.
House Payment v Rent Payment
In the example below, the total house payment is $1,281.01, compared to $1,500 in rent for the same home. Before you consider any of the financial benefits that come with home ownership, it’s actually cheaper to own than to rent. Who knew?
The net cost of housing falls to $764, or just more than half the house payment, when you consider the following:
- Principal Reduction due to Normal Amortization
- Modest Appreciation
- Tax Savings
- Reasonable Maintenance Expense, which a tenant would not have to pay
One of the biggest benefits is the growing equity. As the property value goes up, the unpaid balance goes down. A favorable leverage causes the low down payment to grow to $40,609 in just seven years, based upon a modest 1% appreciation. Use our Financial Calculator to analyze your personal situation, then call us for a consultation to discuss your options.