Whether it is cheaper to rent or to buy a home varies by location. On the national level though, a Federal Reserve study of consumer finances found the net worth for home owners 36X that of renters in 2013!
Trulia has a Rent vs Buy calculator that is really simple to use. I plugged in some numbers and here is an idea of Rent vs Buying for the Sacramento area. I slid the button on the targeted home price until the renting costs and buying costs were close to equal so you could get an idea of what price home you could buy that would equal the amount you are paying in rent. This was using a minimum 3.5% down payment - FHA loan at 3.75% interest rate.
So in other words if you are paying rent of $1400, you could buy a home up to $270,000 and would be breaking close to even every year after your taxes. And I say that because your mortgage may be more than $1400 per month but at tax time there are homeowner deductions you can claim that can be deducted from your taxable income. See the IRS Publication for Home Owners for information on what you can and can't deduct.
Plug your own numbers in and play with the Trulia Rent vs Buy Calculator.
Here's another interactive map to show you across the country if it is cheaper to rent or buy. It depends on your type of mortage, income tax bracket and how long you plan on staying in the home so make those selections at the top of the map. Click on the image below or click here to see where you stand.
Have fun with these little gadgets and if you're ready to buy vs rent, call me!!!
Comments(2)