Rent or Buy

Is it better to buy or rent? The reality is that having the gift of ownership is an American Dream and truly a big part of the American Culture. Statistics shows that currently there are more Americans owning their own homes than ever before.

In the latest Rent vs. Buy Report from Trulia, they explained that homeownership remains cheaper than renting with a traditional 30-year fixed rate mortgage in the 100 largest metro areas in the United States.

One of the main reasons owning a home has remained significantly cheaper than renting is
the fact that interest rates have remained at or near historic lows.

Nationally, rates would have to reach 9.1%, a 128% increase over today’s average of 4.0%, for renting to be cheaper than buying. Rates haven’t been that high since January of 1995, according to Freddie Mac.

Buying a home makes sense socially and financially. If you are one of the many renters who would like to evaluate your ability to buy this year, let’s get together and find you your dream home.

Cons of Renting

If you want to establish a household, renting an apartment or a home might not be the best way of going about it.

You might also be limited to what you can do to the unit. Can you have a Pet? You can’t paint the place? You can’t do X, Y, or Z?

The rental increases never stop – sure, 30 years is a long, long time, but your lifetime will probably be longer. Additionally, your rent can and will most likely rise, even if some level of rent control is in place.

There won’t be any relief in retirement when you rent – you’ll keep paying your landlord for “as long as it takes.”

And at the end, you won’t have anything to say for it, no home equity or ownership, despite all those payments. Nothing to hand off to your kids or to sell for cash proceeds.

So, you might be paying less than your neighbor with the mortgage today, but if your neighbor’s mortgage is fixed, they’ll still be paying the same amount in the future while your rent shoots higher.

Whether it is best to buy or to rent depends on each situation. If you weigh your lifestyle, personal changes and risks, you can make an educated choice and make the decision that is best for you.

Source: Ginnie Mae

The chart shows a cost comparison for a renter and a homeowner over a 7-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.

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Esther Torres Anderson


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