Rent vs. Owning, What’s the Cost?

Renting vs. Owning, What’s The Cost?

We see the cost of homes continuing to rise and this may give the impression that it is getting more difficult to buy a home. Makes sense, right? Well actually, it’s just the opposite.

At first glance, this may appear to defy logic, but keep reading. The percent of income you need to be able to purchase a median-riced home today is going down. And the percentage of income you need to rent is rising.

The end result? It is much more attractive to buy a home now, instead of renting or leasing. In fact, your purchasing power is greater due to the low interest rates.

This is how interest rates look on Feb. 8, 2021

If you already own a home and are thinking of downsizing or maybe upgrading, now would be a great time. And if you thought you couldn’t afford your first home, this may be very good news for you. If you can afford to lease a home, you can now afford to buy one. Of course the benefits are substantial.

Let’s say you spend $3,000/month on rent. At the end of one year, you’ve spent $36,000. No tax benefits, no savings, no home AND you’ve been paying your landlord’s mortgage. In five years, that’s $180,000 you have spent. And that doesn’t include the annual increases in rent. With that same money, you could not only be receiving tax benefits, but a great portion of that money would be going towards principal, thus increasing your equity. Some people see it as forced savings.

Downpayment? There are numerous loan programs, starting at about 3.5% downpayment. And depending on your income and where you are looking for a home, many banks have downpayment assistance for first time home buyers. You could also receive a gift towards the downpayment.

For more information and details, give us a call. We are here to answer your questions and explore your options.