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Rent or Buy...You Pay for the House You Occupy

By
Real Estate Agent with Crye-Leike, Realtors

Whether you rent or buy, you pay for the house you occupy. You must live somewhere and there's a price to pay for it. A simple analysis will show you whether it's cheaper to rent or buy.

Some people don't have any choice but to rent because they don't have the means to qualify for a loan. But for those who do have a down payment and good credit, they actually have a choice of whether to rent or buy. In some cases, owning will cost significantly less than renting.

Rentals are in high demand in many markets and rents are going up. People who have experienced foreclosures and short sales have increased demand. The first comparison a discerning buyer needs to make is whether the house payment is lower than what they'd have to pay in rent.

The next comparison needs to consider the other benefits that accrue to an owner such as principal reduction, appreciation and tax savings. These can dramatically weigh in favor of owning rather than renting.

Tenants have made the decision to buy a home. The decision currently facing them is whether to buy it for themselves or their landlord.

 

 

Sam Thompson
BIC Services, LLC - Fayetteville, NC
BIC Services, LLC

Awesome analysis!  And you did it with only a 1% appreciation rate.  Once we get past this housing cloud that has dampened our market and things get back to a normal level, it will show even more justification to buy instead of paying someone else's mortgage for their equity gains.

Your point about living in your investment is such a big point that people don't think about.  People invest in stocks and bonds and only have the paper to show for it with hopes that their investment increases in value over time.  Primary residences are investments that you get to live in while it increases in value over time.  Well-built homes that are maintained with modest maintenance costs will return in value once this housing bubble and its impact is over.  

These perfect housing conditions with the lower values and historical low interest make buying now a no brainer for those that qualify that we will all look back on in the future as the best time we ever had to buy a home.

Oct 25, 2011 02:21 PM
Donna Hudson
Crye-Leike, Realtors - Bellevue, TN

Great addition to this blog, thanks so much for your comments!

Oct 25, 2011 02:57 PM