by AgentFrances

Sunday, June 23, 2013

RENT VS BUY

According to the NY Times:

If you stay in your home for 4 years, it will cost you $6,418 less than renting, an average savings of $1,604 each year. And it only goes up from there.

According to Trulia:

Even though asking home prices rose 7.0% in the last year, outpacing rent increases of 3.2%, the gap between buying and renting has narrowed only slightly. One year ago, buying was 46% cheaper than renting. Today’s it’s 44% cheaper to buy versus rent. In fact, home ownership is cheaper than renting in all of America’s 100 largest metros. That’s because falling mortgage rates have kept buying almost as affordable, relative to renting, as it was last year. According to Freddie Mac, between February 2012 and February 2013 the 30-year fixed rate dropped from 3.9% to 3.5%, though rates have been rising in March.

According to Ginnie Mae from NAR:

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 home ownership, the homeowner's payment is less than the rental payment after 3 years




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