|
Buy vs. Rent
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.
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 homeownership, 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 |
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 |
|
|
Savings increase every year |
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).
Information on this page provided by Ginnie Mae |
Try the Buy vs. Rent Calculator
Click the Link above to calculate the advantages and considerations of Buying vs. Renting a home.
Privacy Policy
Any personal information you choose to disclose on this site will be kept strictly confidential. Neither My College Condo nor Curt Schreiber will share, rent or sell your information to any other party. We promise to maintain your confidence.
Copyright 2001-2009 Schreiber Real Estate
|