There are many advantages to buying a home versus renting. Your income, savings, and monthly expenditures play an important role in determining how large of a monthly payment you can handle.
In many cases, the amount of money you would spend on rent can be about the same as what you would expect to pay as a homeowner, especially when interest rates are low. Once you factor in the tax benefit for owning a home, the amount saved can be significant.
Here’s an example of a buy vs rent comparison:
*A renter rents a home paying $800 per month with an annual increase of 5% built into the lease
*A buyer purchases a home for $110,000 with a mortgage payment of $1000
*After 6 years, the homeowner’s payment is lower than the renters in this scenario.
*With the tax savings of owning (writing off interest paid), the homeowner’s payment is less then the renters payment after 3 years
*By owning, you also have the benefit of gaining value through appreciation. Although the last few years have been tough on real estate values, historical trends show that the value of real estate tends to double approximately every 10 years.
*The homeowner’s mortgage payment on a standard fixed rate mortgage will have an increasingly higher portion of the payment going to the principal balance every month. After every month’s payment is made, the homeowner will earn a small fraction more of their home. On the other hand, the renter’s monthly payment is gone once it is paid to the landlord.
See if I can qualify to buy (click here)
No comments:
Post a Comment