Rent Versus Own
"Should I rent or should I buy?" A common question from those renters who become tired of the constant moving, wasted monthly payment, inability to customize their space, etc. Renting offers you no equity build on each payment, no tax benefits, no opportunity for long-term appreciation, and no protection against regular rent increases. If you're paying rent, you're really just paying the landlord's mortgage payment.
When you own a home, you can write-off your income taxes the mortgage interest paid on your property thereby giving you tax savings. Further tax savings can come from filing a homestead exemption which will give you a break on your property taxes. A homestead exemption can be filed on your principal residence only and removes part of your property from taxation.
If you do a fixed-rate mortgage, your monthly payment stays the same with fluctuations in just your property taxes and insurance which gets revised every year. They could go down or they could go up, depending on the market. However, you can always protest an annual county tax appraisal of the value of your home. For more information on property taxes, visit here.
Below is a comparison example of costs associated with renting versus owning.
Rent VS Own*
|Monthly Rent||$1400||Principal and Interest||$978|
|Renter's Insurance||$40||Hazard Insurance||$75|
|Property Taxes||$0||Property Taxes||$383|
|Mortgage Insurance (PMI)||$166|
|Monthly Payment to Rent||$1440||Monthly Payment to Own||$1602|
Not factored in ownership column are mortgage interest deductions that will further reduce your after-tax net monthly payment.
Have questions? Don't be shy! Let's get them answered! Contact We work with many first-time home buyers and will patiently guide you through the process. Read more about how to get started here: First-Time Home Buying
* Approximate Payment/Cost Comparison based on estimated annual tax results. Based on 2.6% property tax bracket and on estimated first year interest and taxes. Recommend consulting with tax expert. Payment based on FHA 30-year fixed rate loan with 4.5% interest rate, sales price of $200,000 and a loan balance of $193,000 (3.5% down payment). A homestead tax exemption reduction of $600 annual was applied. Actual savings total amount will vary based on individual property and tax rates. Private Mortgage Insurance (PMI) is removed with a down payment of 20% or greater. PMI is estimated at following rates: 95.01-100% LTV = 1.03% , 90.01-95% LTV = 0.875%, 85.01-90% LTV = 0.625%, 80.01-85% LTV = 0.375%. The actual PMI is based on your loan-to-value (LTV), credit score, and debt-to-income (DTI) ratio. Interest rate/rental rates, prices, terms, and availability subject to change without notice. See a qualified tax consultant for more details.