Owning
versus Renting
Our goals are simple -- to ensure that you're
happy with the home you buy, that you get the best deal
you can, and that owning the home helps you to accomplish
your financial goals. Most people should eventually buy
homes, but not everyone and not at every point in their
lives. To decide whether now's the time for you to buy
a house, consider the advantages of buying and whether
they apply to you.
Owning should be less expensive than renting
Here's a guideline that may change the way you view
your seemingly cheap monthly rent. In order for you
to see how expensive a home you could afford to buy
while having the same approximate monthly cost as your
current rent, simply do the following calculation:
Take your monthly rent, multiply by 200 = purchase
price of home
Example: $ 750 x 200 = $150,000
So, in the preceding example, if you were paying rent
of $750 per month, you would pay approximately the
same amount per month to own a $150,000 home (factoring
in tax savings). Now your monthly rent doesn't sound
quite so cheap compared to the cost of buying a home,
does it?
Even more important than the cost today of buying
versus renting, what about the cost in the future?
As a renter, your rent is fully exposed to increases
in the cost of living, also known as inflation. A reasonable
expectation for annual increases in your rent is 4
percent per year.
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