Buying a home vs
renting a home = no comparison!
Many people ask us
why buying a home is preferable to renting.
The answer is
always the same!
Kent sez: “If you
rent a home, you are helping your landlord buy himself the house. If you are buying a
home, you have a major tax write off as well as the security of your own home!”
Now, that may
sound simple… and it really is. Let me explain a little.
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 |
$1,027,584 |
On the other hand,
if you are buying a house, every payment you make contributes toward your own asset (this
is called "equity" in your house). Assuming you make all the mortgage payments,
you will own the house. The money you would have paid in rent and become “dead”
money, has been used to build an asset which can usually be expected to become worth much
more as time goes on.
| MONTHLY
PURCHASE PAYMENT AMOUNT BY INTEREST RATE |
| LOAN |
5.0% |
5.5% |
6.0$ |
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.
We cannot think of
a single reason for preferring renting over buying, except if you are in a transient
position and do not intend to stay for more than a year or so.
From a financial
aspect, there are calculators available which can show you the benefits of buying as
opposed to renting. For more information, refer to our finance section.
We hope this
information has been helpful to you. If you are ready to start looking to buy a home, why
not check out “Petersens Picks”
which is a selection of Kent’s more interesting properties currently for sale in the
Antelope Valley. If you would like to know more about the Antelope Valley, click here. We'd love to
answer any questions you might have - just send
us an email.
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