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Many people ask us why buying a home is preferable to renting. Our answer is always the same:
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.
That may sound simple… and it really is. Let us explain.
When you rent a house, your only advantages are that you are free of most maintenance responsibilities, and you can move in and out relatively freely (depending on the terms of your rental agreement). The problem is you are spending nearly as much on rent as you could buying your own home. Many renters just don't realize how affordable and beneficial owning their home can be.
| 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 |
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On the other hand, if you are buying a house, every payment you make contributes toward your equity. It's yours to sell or keep. Assuming you make all the mortgage payments, you will own the house. The money you would have paid in rent (money that would have been gone forever), is used instead to build your equity and appreciate. |
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| 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 |
$8.5 |
| $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 |
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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.
Side by side, the comparison is clear. Buying a home has affordable, far-reaching benefits and advantages over renting.
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