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There are many advantages to buying a home versus renting one. View these advantages in the Buy vs. Rent Comparison Chart, or view a financial comparison of buying versus renting in the Buy vs. Rent Calculator.
Your income, savings, and monthly expenses play an important role in determining how large a mortgage you can afford. To figure out the amount you can afford, please click Affordability.
Savings: Buying
In many cases, the amount of money a renter spends on rent can be about the same as or less than the amount a homeowner spends on a mortgage. With the tax benefit for homeowners, the savings can be significant.
Buy vs. Rent Comparison The chart below shows a cost comparison for a renter and a homeowner over a seven year period.
The renter starts out paying $800 per month with annual increases of 5%
The homeowner purchases a home for $110,000 and pays a monthly mortgage of $1,000
After 6 years, the homeowner's payment is lower than the renter's monthly payment
With the tax savings of homeownership, the homeowner's payment is less than the rental payment after 3 years
Years
Rent Payment
Mortgage Payment
Monthly Difference
After Tax Savings
Yearly Difference
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
8-30
Savings increase every year
Monthly Expenses: Buying
Your rental company takes part of your rent payment to cover certain housing expenses. When you decide to purchase a home, you accept responsibility for paying for these expenses (listed below). They are additional costs to your monthly mortgage payment and should be included in your budget estimates:
Property Taxes and Special Assessments
Home/Hazard Insurance
Utilities
Maintenance
Home Owner Association (HOA) Fee: Doesn't apply to all purchases. It pays for trash and snow removal and maintenance of common grounds if applicable.
Membership Fee: It may pay for recreational facilities and other services (cable TV).
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