FineOrangeCountyHomes.com

Bruce Clark from the Clark Group and Coldwell Banker: 949.285.1207: Orange County's Leading Luxury Home Broker

Our new and unique feature search: begin your home search by feature! On the next page you will have many additional search options.

 »  BUY VS. RENT - WHY IT MAKES SENSE TO OWN YOUR HOME


Buying a home is one of the biggest financial decisions one will make. Whether you have purchased a home in the past, or you are a first time buyer, finding the right Realtor is critical.


Related Information:

Buying versus Renting

There are many advantages to buying a home versus renting one. One of the major reasons we buy a home is for shelter: we can do with our own home pretty much what we want. Another is that we get to put down community roots: we can have a say in what's going on where we live. And some are purely financial. Others are more emotional. Whatever the reason, owning vs. renting a home is the right decision for many reasons.

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 here.

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 home ownership, 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 landlord/property owner 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).

Permalink:  http://www.fineorangecountyhomes.com/rent_vs_buy.asp