Renting vs. Buying

rent-or-buy-a-home

Is it cheaper to buy or rent a home?

Do you prefer renting over owning a home – this was a question posed by www.CNNMoney.com. It got me thinking… is there a time when it’s better to rent than buy? Sure, when you are rebuilding your credit, saving up money, or for some personal or family reason. Other than that, though, not really.

Affordability
Do you know what rates were 40 years ago? About the same as they are now. Interest rates and housing prices normally move inversely. It’s the law of supply and demand. However, after the housing bubble of 2008 the two began moving congruently, and we are still in a market where interest rates are at all-time lows, and due to oversupply, so are housing prices.

While many homeowners turned to renting after short selling or losing their home, rents increased. And they continue to increase on average at 4% per year.

Can you buy a home for about the same as your rent? Yes. The key to moving from a renter to a homeowner is knowing your limits. Be realistic and stay within your range. Know that you may move up later. See the vision of how you can make a house a home, and reap the benefits of the long term pay off.

Investment
Most renters stay an average of 3 years. So every few years they incur the added cost of moving, and painting or decorating their new place. Not to mention the hidden costs of having a landlord or rules you may not like.
On average rent prices increases 4% per year. So in three years, a renter is paying a 12% increase in monthly expenses plus moving costs. On a 30 year fixed rate mortgage, your payment will not change. Only your escrow, that is taxes and insurance, may fluctuate, and those are capped.

The National Association of Realtors estimates that the average homeowner stays for nine years. In those nine years, a $300,000 home with a 4% rate of appreciation will sell for $408,000. So while a renter has spent money, a homeowner who buys in a stable market has made money, and likely has a lower payment than the person who has rented for the last nine years.

Independence
Say good bye to making your landlord money. Say good bye to rules and restrictions. Invest in your future, and paint the walls purple if you want. That’s the joy of homeownership.

To see what you can afford, get pre-approved by clicking the securing Apply Now button above.

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