I know that men and women my age feel more comfortable renting. It’s easy, little commitment, and a lease is less stressful to read than a real estate contract. What you may not know is owning a house is usually always cheaper than renting. If renting was cheaper, then how would so many landlords make money off you month after month?
Here are some facts about renting versus owning:
- Renting is a dead investment, you’re paying the landlords mortgage every month so he/she can eventually sell it and make even more money on their house.
- Renting offers no equity, you don’t own anything.
- Renting offers no tax benefit, while Interest on your mortgage is tax deductible.
- Houses, when taken care of and properly maintained, appreciate. A great mindset to have is that every mortgage payment will eventually be repaid to you, plus some extra.
Here is payment plan based on a $100,000 house with a 30-year fixed rate loan with 5% interest rate and a $90,000 loan balance.* Typical rent for this price would be about $1,000.
Rent vs. Own
|Monthly Payment||$1,000||Monthly Payment||$ 483|
|Insurance||$ 30||Insurance||$ 50|
|Taxes||$ 0||Taxes||$ 60|
|Total Payment||$1,030||Total Payment||$593|
|Interest Deduction||$ 0||Interest Deduction||$ 100|
|Tax Deduction||$ 0||Tax Deduction||$ 60|
|Net Monthly Payment||$1,030||Net Monthly Payment||$ 433|
*Determining how much of your tax and interest is deductible is a very complex process that is different for everyone. Some factors include the amount of your loan, how long you have owned your house, and how much you make, but there are many more factors to determine your deduction.