Rent Vs. Buy
There are many advantages to buying versus renting a home. View these advantages in the buy versus rent Comparison chart.
Year | Rent Payment | Mortgage Payment | Monthly difference | Monthly After tax savings | Yearly difference | Yearly After tax savings |
1 | 800 | 1000 | -200 | -50 | -2400 | -600 |
2 | 840 | 1000 | -160 | -10 | -1920 | -120 |
3 | 882 | 1000 | -118 | +32 | -1416 | +384 |
4 | 926 | 1000 | -74 | +76 | -888 | +912 |
5 | 972 | 1000 | -28 | +122 | -336 | +1464 |
6 | 1021 | 1000 | +21 | +171 | +252 | +2052 |
7 | 1072 | 1000 | +72 | +222 | +864 | +2664 |
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Your income, savings and monthly expenses play an important role in determining how large of a mortgage you can afford. In many cases the amount of money a buyer spends on rent can be about the same as or less than the amount a homeowner spends on a mortgage.
With tax benefits for homeowners, the savings can be significant. The chart below shows a cost comparison for a renter and a homeowner over a 7 year time period.
The renter starts out paying $800.00 per month with annual increases of 5%.
The homeowner purchases a home for $110000, and pays a monthly mortgage of $1000.00
After 6 years the homeowners payment is less than the renters monthly payment.
With the tax savings of home ownership, the homeowners payment is less than the rental payment after 3 years.
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