Renting Vs. Buying

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.

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. 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