Are usually financial Long term Effect of Renting vs Buying A Home?
Playing the daily newscasts can certainly scare anyone from investing in a home. Renting is the way to go is the new mantra instant but is it?
Some who were burned from the housing predicament over the last few years are the lead singers. And their lyrics are usually loud and clear to home buyers – be cautious tutorial rent while you can. Renting is always a viable option and several of the advantages are:
- · No real estate taxes
- · No HOA fees
- · Minimal maintenance if almost any
- · Never have to replace the roof or paint the exterior
- · No remodeling
- · No loss of appreciation
- · Reduce housing payments
- · No interest deduction
- · No real estate tax deductions
- · No asset
- · No appreciation
- · Rents increase over time
- · Susceptible to relocating often
The biggest advantage of owning a home is Economic. Here is an example of the actual money saved over a 10 year period of time. Home purchase price $450, 000; 5% interest rate, 10% lower, assumption stay in home for 10 years.
- The rent on a matching house $2, 500.
- Initial Monthly Rent: $2500
- Final cost $450, 000
- Down Payment 10%
- Interest Rate 5%
- Years Want to Stay in Home 10 years
- Yearly Property Tax 1%
- Twelve-monthly Home Appreciation 2%/year
- Rent Increase 2%/year
The total amount connected with rent paid $339, 700. The rent payment also incorporates $30 for insurance and by the 10th year the particular rent would increase to $2800. 85 per month.
Overall mortgage payments over the same time period are $381, 720. This specific figure includes mortgage payment, insurance, taxes and maintenance costs predicted at $3600 per year.
At first glance $339, 701(rent) vs $381, 720 (acheter louer) shows a savings by renting with $42, 019, but there is no appreciation in the rental property for that tenant and there are no tax deductions. Estimated tax financial savings is $88, 956. This figure includes the first 12 months deductible closing costs.
The savings of owning vs buying is $46, 937. This figure does not include any sort of appreciation as speculating the future is unpredictable.
If you leased and had to move one or more times during this period, add the separation costs and the savings for owning increases.
Buying a residence is not only about the money but it is one of the major considerations these days. Do your own calculations – rent versus own – if you are renting and determine If now is the right time for buying a property.