Should I Rent or Own?
Almost everyone is overwhelmed by the legal and financial red tape they believe surrounds the purchase of a home. So, the easy way out is to just keep paying rent. We have a better solution for your future!
Rent vs. Own
If you see yourself in any of these situations, here are a few facts that can change your mind:
Most people actually qualify for a 3 percent down or less mortgage but don't realize it. Some people can actually qualify for a ZERO down payment mortgage!
There are special government programs that help first-time homebuyers come up with a down payment.
The average mortgage payment costs about the same as the average rent payment. For example, if you are paying rent of $650 per month, you could be paying that amount toward owning a home of your own worth $77,500. This home would probably provide more space and privacy than what you now have.
When a survey of renters was conducted, 77 percent said that the biggest reason they don't even check into owning their own home is their fear of feeling obligated to buy - or worse, being hounded by salespeople.
Remember, you may not see rates this low again. For example, if a "renter" recently saw a house selling for $125,000 and has $20,000 in savings to use as a down payment; a $105,000 30-year mortgage at 7.5 percent would cost about $733 a month. This person may feel as though $883 is a stretch right now, but if they wait, and prices and mortgage rates rebound to the levels of five years ago, the exact same home might cost $150,000, and could be paying a 9 percent interest rate.
Renting deprives you of big tax breaks. Home ownership is one of the last remaining tax shelters. In the example above, the renter would be able to deduct about $9,300 in mortgage interest and real estate taxes on their annual tax return. The renter earns $30,000 a year, which puts them in the combined 31 percent federal and state tax bracket. Therefore, their tax savings could come to about $2,900 a year, or almost an additional $250 in take-home pay each month. If they rent, no tax breaks will be provided.
Finally, between 1968 and 1992, the median price of a single-family home rose an average of 6 percent a year, according to the National Association of Realtors; over longer periods, the increase has been between 3 and 4 percent. That's great - if you buy early and hang on to your purchase. If you don't, you'll have to keep up with those increases through other investments, which is generally difficult to do.