Owning Makes More Sense

When comparing the cost of owning a home to renting, there is more to consider than the difference between a mortgage payment and the rent currently being paid. The mortgage payment very well could be lower than the rent, but when you consider the other benefits, owning could be much lower cost than renting.31066694-250.jpg

A portion of each mortgage payment is reducing the principal balance and building equity for the owner. Similarly, the home appreciates and also adds to the equity increase over time.

There are additional expenses for owning a home that renters don’t have, like repairs and possibly, a homeowner’s association. To get a clear picture, look at the following example of a $300,000 home with a 3.5% down payment on a 4.5%, 30-year mortgage.

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The total payment is $2,264 including principal, interest, property taxes, property and mortgage insurance. However, when you consider the monthly principal reduction, appreciation, maintenance and HOA, the net cost of housing is $1,218. It costs $1,282 more to rent at $2,500 a month than to own. In a year’s time, it would cost $15,000 more to rent than to own which is more than the down payment and closing costs to buy the home.

With normal amortization and 3% annual appreciation, the $10,500 down payment in this example turns into $112,00 in equity in seven years. Check out your own numbers using the Rent vs. Own or call me at (316) 337-5154. Owning a home makes sense and can be one of the best investments a person will ever make.

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