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. View a simple comparison of the costs of buying and renting a home in below. Buying versus Renting - There are many advantages to buying a home versus renting one. Your income, savings, and monthly expenses play an important role in determining how large a mortgage you can afford.
Savings: Buying a home - 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.
Buy vs. Rent Comparison for 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
Monthly Expenses: First of all 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. 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).
