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Home Ownership vs. Renting

By
Real Estate Agent

Rent vs. Own

 

It isn't unusual for folks to ponder the benefits that can come from Home Ownership.  Here are a few things to consider:

(1) Predictability. Unlike rent, your mortgage payments don't go up over the years so your housing costs may actually decline, as you own the home longer. However, keep in mind that property taxes and insurance costs will rise.

(2) Tax breaks. The U.S. Tax Code lets you deduct the interest you pay on your mortgage, property taxes you pay, and some of the costs involved in buying your home.

(3) Equity. Money paid for rent is money that you'll never see again, but mortgage payments can provide a way to build an equity ownership interest in your home.

(4) Savings. Building equity in your home is a ready-made savings plan. And when you sell, you can generally take up to $250,000 ($500,000 for a married couple) as gain without owing any federal income tax.

(5) Freedom. The home is yours. You can decorate any way you want and be able to benefit from your investment for as long as you own the home.

(6) Stability. Remaining in one neighborhood for several years, gives you a chance to participate in community activities, lets you and your family establish lasting friendships, and offers your children the benefit of educational continuity.

To calculate whether renting or buying is the best financial option for you, use the link below to access calculator courtesy of Ginnie-Mae.

Related Links:
http://www.ginniemae.gov/rent_vs_buy/rent_vs_buy_calc.asp?Section=YPTH

Posted by

Myrl Jeffcoat ActiveRain Signature
  

Comments(23)

Richard Iarossi
Coldwell Banker Residential Brokerage - Crofton, MD
Crofton MD Real Estate, Annapolis MD Real Estate

Myrl,

Well thought out post. Simple and effective. Some renters just need to sit down with an agent and a loan officer. Many would be surprised that they can actually buy instead of renting.

Rich

Sep 07, 2010 02:58 PM
Myrl Jeffcoat
Sacramento, CA
Greater Sacramento Realtor - Retired

William - For as long as I can remember, I have thought it would be great to do away with income taxes, and tax instead at the cash register.  I have always thought it ludicrous that we tax folks for their hard work, while allowing certain passive income to be sheltered.  And don't get me started on the underground income like drugs and prostitution, that pay no tax at all.  Taxing on goods purchased at the point of sale would alleviate some of that.  However, I think there should be no tampering with the tax shelter on home ownership.  At least, not on the primary residence home.

Sep 07, 2010 02:58 PM
Myrl Jeffcoat
Sacramento, CA
Greater Sacramento Realtor - Retired

Rich - I agree.  Most folks just need to sit with a professional, who can help them pencil out the difference and get them started.  I can remember just prior to buying my own home, I was overwhelmed by the prospect of even beginning the process.  Fortunately, I worked as an insurance claims clerk, in an agency that sold both insurance and real estate.  It was a real estate agent in that office, that found me an exceptional opportunity, with a good assumable loan.  I borrowed little bits of money from every relative I could tap, to get enough of a down payment together with my savings.  But, within the year, I had paid them back, and fixed the place up a bit, and had a payment on a nice house that was cheaper than rent in the little apartment I had. 

Sep 07, 2010 03:04 PM
Paula Swayne
Dunnigan, Realtors, Sacramento (916) 425-9715 - Sacramento, CA
Realtor-Land Park, East Sac & Curtis Park -Dunniga

Hi Myrl!
I just read an article in which research was done regarding if it is better to rent or to own.  It turns out, it depends on where you live.  For us, the good news is that in Sacramento, it is better to own than to rent.  Down south, not so much.

Sep 07, 2010 05:55 PM
Myrl Jeffcoat
Sacramento, CA
Greater Sacramento Realtor - Retired

Paula - I would also suspect that it would depend on timing as well.  For instance, it probably would have been better to have rented in 2005, rather than buying.  But in this market it seems the majority of locations around the country likely have excellent opportunities price wise.  And current interest rates, are unbelievably low. 

Sep 08, 2010 01:33 AM
Elizabeth Weintraub Sacramento Broker
Elizabeth Anne Weintraub, Broker - Sacramento, CA
Put 40 years of experience to work for you

Hey Myrl: Yeah, as usual, you've got your finger right on the pulse. Many of my Sacramento short sales are homes that were purchased in 2005. You're absolutely correct, sometimes timing is as important as location -- there's hardly a one-size-fits-all response for the entire population of Sacramento. But you know what the most reason was for me to buy my first home? To be able to blast my stereo without having to listen to some bozo banging on his wall and yelling at me to turn it down.

Sep 08, 2010 02:07 AM
Sandy Shores FL Realtor®, Melbourne Real Estate
M & M Realty of Brevard Inc. - Melbourne, FL
Brevard County Real Estate, Florida's Space Coast

Hi Myrl, Today the question is certainly in the forefront of so many people's minds - she I rent or should I own?  Great points to the positives of owning, Interest rates and home prices are historically low.  It's a great time to buy here in our area.

Sep 08, 2010 02:55 AM
William Johnson
Retired - La Jolla, CA
Retired

Good Morning Myrl,

A milestone has taken place and I didn't even realize it. You hit a new milestone of the 400,000 points level and as such I wanted to award to you your star on the ActiveRain Walk of Fame. Congratulations Myrl !

Congratulations Myrl Jeffcoat

Sep 08, 2010 05:34 AM
Myrl Jeffcoat
Sacramento, CA
Greater Sacramento Realtor - Retired

William - I am so tired of being blonde, I don't think I can handle it anymore. . .LOL!  Do you realize I have forgotten, and had to be reminded everytime one of these milestones comes up.  This one was no different.  Thanks for reminding me, and thanks for my little star!  You know, you can calendar most any event so you don't forget. . .But, for one reason or another, I don't see these coming:-)  I shot past that 400,000 mark over 2000 points ago!  It must have happened while I was living it up at the Greek Festival, or was down at Old Sacramento getting shot at during Gold Rush Days!

Sep 08, 2010 05:47 AM
Jack Gilleland
Home Inspection and Investor Services, Clayton - Clayton, OH

Congrats on the milestone Myrl, and great info for those on the fence between renting and buying.

Sep 08, 2010 07:10 AM
Steve Merson 512 412 1621
Keller Williams Realty - Austin, TX
CNE, e-PRO

Hi Myrl,

I'd just like to add my congratulations to reaching the 400K milestone. Your posts are always infiormed and well presented and your photography is spectacular.  Keep up the good work!

Steve 

Sep 08, 2010 07:16 AM
Mary Yonkers
Alan Kells School of Real Estate/Howard Hanna Real Estate - Erie, PA
Erie/PA Real Estate Instructor

Myrl,

Sorry I missed this post a few days ago.  The graphic captures one's attention.  Congrats on reaching the huge # 400,000 +.  Keep blogging and I will keep reading.

Sep 08, 2010 02:08 PM
Gloria Todor
Premier Property Sales & Rentals - Springfield, PA
& Doug Durren (484) 431-3686 in SE PA

Myrl, Thank you for putting this post together.  Very timely for me as I have a few clients asking me this question at the moment.  Interesting to hear how just keep doing your thing without paying attention to the points.  That must mean you are enjoying yourself!  Congratulations!

Gloria

Sep 08, 2010 02:27 PM
Myrl Jeffcoat
Sacramento, CA
Greater Sacramento Realtor - Retired

Jack and Izzy - Thank you!  Hopefully, the points I made about renting vs. owning will make a difference for some.

Sep 08, 2010 02:41 PM
Myrl Jeffcoat
Sacramento, CA
Greater Sacramento Realtor - Retired

Steve - Well thank you, Kind Sir!  I'm glad you enjoy the photography as well!

Sep 08, 2010 02:42 PM
Myrl Jeffcoat
Sacramento, CA
Greater Sacramento Realtor - Retired

Mary - Actually, I only posted this one about 24 hours ago.  So, you didn't miss it by much!  I suspect I'll be around blogging for awhile, so you will have something to keep reading:-)

Sep 08, 2010 02:43 PM
Myrl Jeffcoat
Sacramento, CA
Greater Sacramento Realtor - Retired

Doug and Gloria - I look at my points every once in awhile.  But apparently, not when I'm supposed to. . .LOL!  I must admit I'm an ActiveRain "junkie" - and yes, I'm really enjoying myself.

Sep 08, 2010 02:45 PM
William Johnson
Retired - La Jolla, CA
Retired

Hi Myrl, I want to be the MM mark so I can retire , ahhh, to be able to sleep again and not feel like I forgot to respond to someone's wonderful comment. I sure hope I make it. I'm running out zoos and San Diego treasures. I might have to move to get the last 500,000 points I need. Either that or write more about real estate of which I know so little about. LMAO.

Sep 08, 2010 06:40 PM
Myrl Jeffcoat
Sacramento, CA
Greater Sacramento Realtor - Retired

William - I have had those same fears about running out of city treasures to blog about.  But, there will always be events in Sacramento and San Diego that we can attend and blog about!  In a way it is a healthy thing.  It gets us out there, keeps us involved in the community.  I know what you mean about writing about "real estate." 

Sep 09, 2010 04:31 AM
Ellie McIntire
Ellicott City Clarksville Howard County Maryland Real Estate - Ellicott City, MD
Luxury service in Central Maryland

Myrl. So perfectly said. With seller concessions so popular, Veterans can purchase a home with no money down. Far cheaper than a rental.

Sep 09, 2010 10:08 AM