Buying Vs. Renting
There are many advantages to buying a home versus renting one. View these advantages in the Buy vs. Rent Comparison Chart, or view a financial comparison of buying versus renting in the Buy vs. Rent Calculator.
Your income, savings, and monthly expenses play an important role in determining how large a mortgage you can afford. To figure out the amount you can afford, please click Affordability.
In many cases, the amount of money a renter spends on rent can be about the same as or less than the amount a homeowner spends on a mortgage. With the tax benefit for homeowners, the savings can be significant.
Buy vs. Rent Comparison
The chart below shows a cost comparison for a renter and a homeowner over a seven year period.
Monthly Expenses to consider when Buying
Your rental company takes part of your rent payment to cover certain housing expenses. When you decide to purchase a home, you accept responsibility for paying for these expenses (listed below). They are additional costs to your monthly mortgage payment and should be included in your budget estimates:
Buy vs. Rent Comparison Chart
There are many advantages to buying a home versus renting one. View these advantages in the Buy vs. Rent Comparison Chart, or view a financial comparison of buying versus renting in the Buy vs. Rent Calculator.
Your income, savings, and monthly expenses play an important role in determining how large a mortgage you can afford. To figure out the amount you can afford, please click Affordability.
In many cases, the amount of money a renter spends on rent can be about the same as or less than the amount a homeowner spends on a mortgage. With the tax benefit for homeowners, the savings can be significant.
Buy vs. Rent Comparison
The chart below shows a cost comparison for a renter and a homeowner over a seven year period.
- The renter starts out paying $800 per month with annual increases of 5%
- The homeowner purchases a home for $110,000 and pays a monthly mortgage of $1,000
- After 6 years, the homeowner's payment is lower than the renter's monthly payment
- With the tax savings of homeownership, the homeowner's payment is less than the rental payment after 3 years
| Years | Rent payment | Mortgage Payment | Monthly Difference | After Tax Savings | Yearly Difference | After Tax Savings |
| 1 | 800 | 1000 | -200 | -50 | -2400 | -600 |
| 2 | 840 | 1000 | -160 | -10 | -1920 | -120 |
| 3 | 882 | 1000 | -118 | +32 | -1416 | +384 |
| 4 | 926 | 1000 | -74 | +76 | -888 | +912 |
| 5 | 972 | 1000 | -28 | +122 | -336 | +1464 |
| 6 | 1021 | 1000 | +21 | +171 | +252 | +2052 |
| 7 | 1072 | 1000 | +72 | +222 | +864 | +2664 |
| 8-30 | Savings increase every year | |||||
Monthly Expenses to consider when Buying
Your rental company takes part of your rent payment to cover certain housing expenses. When you decide to purchase a home, you accept responsibility for paying for these expenses (listed below). They are additional costs to your monthly mortgage payment and should be included in your budget estimates:
- Property Taxes and Special Assessments
- Home/Hazard Insurance
- Utilities
- Maintenance
- Home Owner Association (HOA) Fee: Doesn't apply to all purchases. It pays for trash and snow removal and maintenance of common grounds if applicable.
- Membership Fee: It may pay for recreational facilities and other services (cable TV).
Buy vs. Rent Comparison Chart
| Advantages | Considerations | |
| Buy | Property builds equity | Responsible for maintenance |
| Sense of community,stability and security | Responsible for property taxes | |
| Owner is free to change decor and landscaping | Possibility of foreclosure ans loss of equity | |
| Not dependent on landlord to maintain property | Less mobility than renting | |
| Rent | Little or no responsibility for maintenance | No tax benefits |
| Easier to move | No equity is built up | |
| No control over rent increases | ||
| Possibility of eviction |
Homeowners Tax Benefits
For those who rent, the tax savings of ownership go to the landlord, not to the tenants. Wouldn't you rather build equity for yourself every month instead of paying someone else and giving away "your" tax savings?
- Purchasing a home can provide valuable tax savings to homebuyers. Mortgage interest, property tax, and other payments associated with financing a home can apply to your tax deductions. They may decrease the amount of income tax you must pay to the federal government.
- Another financial advantage to owning a home is that as you begin to pay off your mortgage loan, you build equity in your property. In other words, the value of your home can increase as your total mortgage amount decreases over time.
For those who rent, the tax savings of ownership go to the landlord, not to the tenants. Wouldn't you rather build equity for yourself every month instead of paying someone else and giving away "your" tax savings?