There are many advantages to buying a home versus renting one. View these advantages below and to the right in the Mortgage Payments calculator along with the additional information below.
|Buy vs. Rent Comparison Chart||ADVANTAGES||CONSIDERATIONS|
|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|
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.
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
- Home Owner Association (HOA) Fee: Doesn’t apply to all purchases. It pays for trash and snow removal and maintenance of common grounds if applicable.
- Membership Fee: It may pay for recreational facilities and other services (cable TV).
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 home ownership, 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|
|8-30||Savings increase every year|