Should you Rent or Buy a Single Family Home? Phoenix Arizona, Ahwatukee Arizona. 
Should you Rent or Buy a Single Family Home? It is cheaper to pay rent on a single family home or pay a mortgage on a single family home?
This article compares the average monthly rent paid for a rental compared to how much the mortgage payment might be to purchase an average priced single family home in greater Phoenix.
The average single family rental rate is $1,302 and average single family purchase price is $171,500.00 for November 2010 for Greater Phoenix. (This information is available from Arizona Regional Multiple Listing Service, Inc.
Now, if we look at a FHA 3.5% down loan, fixed rate of 4.5% for 30yrs at a purchase price of $171,500.00 the monthly payment with principle, interest and mortgage insurance (MIP), would be $972.00. Granted, we have to consider taxes and homeowners insurance; additional cost of 200.00 to $972.00= $1,172.00 That’s a savings of $130.00 per month, and a total savings of $1,560.00 per year. What could you do with an extra $1,560.00 per year? Now how do you feel about “Should you Rent or Buy a Single Family Home?”
One benefit of owning is tax deductions.
If a home owner itemizes on their federal tax return they may take a tax deduction for the annual mortgage interest paid and annual property taxes paid.
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Possible Tax deduction for above scenario |
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$7,467.00 mortgage interest paid first year on loan, plus $1,800.00 in property taxes paid the first year= $9,267.00 x 22% federal tax rate=$2,039.00 tax deduction. (The actual tax rate will vary according to the owner’s income and is only an estimate for this scenario. $2,039.00 may be deducted from federal taxes. $2,039.00 divided by twelve months is $170.00 |
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$1,002.00 Effective monthly mortgage payment if owner itemizes and able to take deductions. $1,172-170=1,002.00 OR $300.00 Less than paying $1,302.00 in rent.
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Conclusion,
Should you Rent or Buy a Single Family Home? 
While there are many reasons to rent or buy; this article compares the average monthly rental amount paid for a single family home in Greater Phoenix compared to the amount of a monthly mortgage payment using a scenario to purchase the average priced single family home in Greater Phoenix. If analyzed only by the amount of the monthly payment buying trumps renting in the example given.
If your thinking about buying or renting, please call me for any services you will need.
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