Financing:
Buying Versus Renting

Excerpted from www.ginniemae.gov.

There are many advantages to buying a home versus renting one. 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 homeownership, the homeowner's payment is less than the rental payment after 3 years

Monthly Expenses: Buying

Your landlord 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 removal and maintenance of common grounds if applicable.
• Membership Fee: It may pay for recreational facilities and other services (cable TV).

Use the Buy-Versus-Rent calculator to compare the advantages and disadvantages of buying versus renting.