The Real Cost of Renting vs. Owning
Some people believe that homeownership is riskier than renting. However, the numbers clearly show that owning a home is still a very solid path to build wealth. Conversely, everyone agrees that renting will not help you achieve prosperity.
Even though home prices have been dropping in many parts of the country, the long-term data can be used as evidence that even with conservative appreciation your bottom line costs are significantly less than when renting.
Factoring in the tax benefit that home-owners receive is another bonus that improves the bottom line cost of owning your home.
Also keep in the mind that the costs of owning a home have been steadily declining while rents have been steadily increasing!
Your Home = Your Savings Account
Additional irrefutable evidence is that homeowners pay down the principal more and more with each payment. This loan reduction is essentially a forced savings account because the value of your payments accumulates in the equity of your home.
If you are the type of person who is renting because you are not sure now is a good time to invest in a home, give us a call at 800-499-6371 and we will run the numbers for your individual situation. You’ll probably be thrilled to discover how dramatically your financial future can improve.
Factors used: $200,000 purchase price, 20% down, $160,000 30 yr. fixed loan at 4%. Principal & Interest payment = $763.86, taxes = $250/Mo., Insurance = $50/Mo. & Maintenance = $166.67/Mo. Tax deductibility at 28%. Tax savings, principal paid and appreciation averaged over a 5 year period. Always consult with your tax advisor for tax advice specific to your situation.