|
Buying a Home vs. Renting a Home
When you rent a house, the only real advantages
you have are that you are generally free of most
maintenance responsibilities, and that you are also
free to change houses whenever you want (depending on
the terms of your rental agreement).
The
problem with this is, that you are spending nearly as
much on rent as you would on repaying a loan, and at
the end of any given time frame, you have nothing to
show for it.
|
MONTHLY
RENT |
AFTER 10
YEARS |
AFTER 20
YEARS |
|
|
$500 |
$77,641 |
$205,517 |
|
$800 |
$124,226 |
$328,827 |
|
$1,000 |
$155,282 |
$411,034 |
|
$1,500 |
$232,923 |
$616,551 |
|
$2,000 |
$310,565 |
$822,067 |
|
$2,500 |
$388,206 |
$1,027,584 |
When you buy a house, every payment you make
contributes toward your own asset ("equity" in your
house). Assuming you make all the mortgage payments,
you will own the house. The money you would have paid
in rent and become “dead” money, has been used to
build an asset which can usually be expected to become
worth much more as time goes on.
|
MONTHLY
PURCHASE PAYMENT AMOUNT BY INTEREST RATE |
|
LOAN |
5.0% |
5.5% |
6.0$ |
6.5% |
7.0% |
7.5% |
8.0% |
8.5% |
9.0% |
|
|
$80,000 |
$429 |
$454 |
$480 |
$506 |
$532 |
$559 |
$587 |
$615 |
$644 |
|
$100,000 |
$537 |
$568 |
$600 |
$632 |
$665 |
$699 |
$734 |
$769 |
$805 |
|
$120,000 |
$644 |
$681 |
$719 |
$758 |
$798 |
$839 |
$881 |
$923 |
$966 |
|
$140,000 |
$752 |
$795 |
$839 |
$885 |
$931 |
$979 |
$1,027 |
$1,076 |
$1,126 |
|
$160,000 |
$859 |
$908 |
$959 |
$1,011 |
$1,064 |
$1,119 |
$1,174 |
$1,230 |
$1,287 |
|
$180,000 |
$966 |
$1,022 |
$1,079 |
$1,138 |
$1,198 |
$1,259 |
$1,321 |
$1,384 |
$1,448 |
|
$200,000 |
$1,074 |
$1,136 |
$1,199 |
$1,264 |
$1,331 |
$1,398 |
$1,468 |
$1,538 |
$1,609 |
|
$220,000 |
$1,181 |
$1,249 |
$1,319 |
$1,391 |
$1,464 |
$1,538 |
$1,614 |
$1,692 |
$1,770 |
|
$240,000 |
$1,288 |
$1,363 |
$1,439 |
$1,517 |
$1,597 |
$1,678 |
$1,761 |
$1,845 |
$1,931 |
By renting, you lose the ability to build equity,
take advantage of tax benefits and protect yourself
against rent increases. Also, you may not be free to
decorate without permission and are literally at the
mercy of the landlord for your housing.
Owning a home has many benefits. When you make a
payment, you are building equity- and that is an
investment. Owning a home also qualifies you for tax
breaks which can help in financing the upkeep in
maintaining your home. |
