Home Ownership vs. Renting
You've heard time and time again that you can buy a home for the same amount you're currently paying in rent. But is that really true? What do those numbers actually look like? Why should you own a home when renting means little responsibility and a short term commitment?
It's our goal to provide you with answers to all of those questions in a concise, easy-to-understand dialogue. So let's get started!
Mortgage Payment vs. Rent Payment
Can you really buy a home and have about the same monthly payment as when you rent? Sure! Here's the average rent at a few local apartment complexes:
We know that there are both less expensive and more expensive rental options, but for our purposes, we're going to say that the average renter is paying $1000/month for a 2 bedroom apartment. How much house can you buy for $1000/month? Let's use a mortgage calculator and find out.
What Costs Make Up a Mortgage Payment?
Why is Owning a Home Good for My Future?
In one word, equity! Equity is the cash value of your home, minus the current loan balance. The more you pay on your home, the more equity you have. Building equity in a home is a much better use of your hard-earned money than paying it to a landlord. You can add value to your home by making improvements and even gain value based on the marketplace. That means that when you sell, your home could be worth more than you paid for it, resulting in extra dollars in your pocket whereas renting wouldn’t have given you a chance to earn any equity and therefore you'll recieve no extra money when moving on.
There’s also the possibility you will pay off your mortgage and decide to stay living in your home. At that point, you would begin to save significantly (vs. renting) because there will be no more monthly payments.
Until you pay off your mortgage, you can take advantage of tax breaks that will save you money. For example, if you own your home and itemize your deductions, then you can deduct the amount of mortgage interest and real estate taxes you pay each tax year.
What Else Should I Know?
Interested in learning more? Click here for a step by step guide to buying a home.
How Do I Get Started?
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