Renting a Home v.s. Buying a Home
When you rent a house, the only real
advantages you have are that you are generally free of most
maintenance responsibilities, and that you are also free
to change houses whenever you want (depending on the terms
of your rental agreement). The problem with this is,
that you are spending nearly as much on rent as you would
on repaying a loan, and at the end of any given time frame,
you have nothing to show for it.
| MONTHLY
RENT |
AFTER
10 YEARS |
AFTER
20 YEARS |
|
| $500 |
$77,641 |
$205,517 |
| $800 |
$124,226 |
$328,827 |
| $1,000 |
$155,282 |
$411,034 |
| $1,500 |
$232,923 |
$616,551 |
| $2,000 |
$310,565 |
$822,067 |
| $2,500 |
$388,206 |
$1,027,584 |
When you buy a house, every payment
you make contributes toward your own asset ("equity" in your
house). Assuming you make all the mortgage payments, you will
own the house. The money you would have paid in rent and become “dead” money,
has been used to build an asset which can usually be expected
to become worth much more as time goes on.
By renting, you lose the ability to build
equity, take advantage of tax benefits and protect
yourself against rent increases. Also, you may not be free
to decorate without permission and are literally at the
mercy of the landlord for your housing.
Owning
a home has many benefits. When you make a payment,
you are building equity- and that is an investment. Owning
a home also qualifies you for tax breaks which can help
in financing the upkeep in maintaining your home. |
MONTHLY
PURCHASE PAYMENT AMOUNT BY INTEREST RATE |
| LOAN |
5.0% |
5.5% |
6.0$ |
6.5% |
7.0% |
7.5% |
8.0% |
8.5% |
9.0% |
|
| $80,000 |
$429 |
$454 |
$480 |
$506 |
$532 |
$559 |
$587 |
$615 |
$644 |
| $100,000 |
$537 |
$568 |
$600 |
$632 |
$665 |
$699 |
$734 |
$769 |
$805 |
| $120,000 |
$644 |
$681 |
$719 |
$758 |
$798 |
$839 |
$881 |
$923 |
$966 |
| $140,000 |
$752 |
$795 |
$839 |
$885 |
$931 |
$979 |
$1,027 |
$1,076 |
$1,126 |
| $160,000 |
$859 |
$908 |
$959 |
$1,011 |
$1,064 |
$1,119 |
$1,174 |
$1,230 |
$1,287 |
| $180,000 |
$966 |
$1,022 |
$1,079 |
$1,138 |
$1,198 |
$1,259 |
$1,321 |
$1,384 |
$1,448 |
| $200,000 |
$1,074 |
$1,136 |
$1,199 |
$1,264 |
$1,331 |
$1,398 |
$1,468 |
$1,538 |
$1,609 |
| $220,000 |
$1,181 |
$1,249 |
$1,319 |
$1,391 |
$1,464 |
$1,538 |
$1,614 |
$1,692 |
$1,770 |
| $240,000 |
$1,288 |
$1,363 |
$1,439 |
$1,517 |
$1,597 |
$1,678 |
$1,761 |
$1,845 |
$1,931 |
|