Rent vs. Buy
There are many advantages to buying a home versus renting one. View these advantages in the Buy vs. Rent Comparison Chart.
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.
Rent vs. Buy 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.
| Years | Rent Payment | Mortgage Payment | Monthly Difference | After Tax Savings | Yearly Difference | After Tax Savings |
| 1 | 800 | 1,000 | -200 | -50 | -2,400 | -600 |
| 2 | 840 | 1,000 | -160 | -10 | -1,920 | -120 |
| 3 | 882 | 1,000 | -118 | +32 | -1416 | +384 |
| 4 | 926 | 1,000 | -74 | +76 | -888 | +912 |
| 5 | 972 | 1,000 | -28 | +122 | -336 | +1,464 |
| 6 | 1,021 | 1,000 | +21 | +171 | +252 | +2,052 |
| 7 | 1,072 | 1,000 | +72 | +222 | +864 | +2,664 |
| 8-30 | Savings increase every year |
Monthly Expenses: Buying
Your rental company 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).
Advantages of Buying vs. Disadvantages of Renting
| Advantages | Disadvantages | |
| Buy | Property builds equity | Responsible for maintenance |
| Sense of community, stability, and security | Responsible for property taxes | |
| Free to change decor and landscaping | Possibility of foreclosure and loss of equity | |
| Not dependent on landlord to maintain property | Less mobility than renting | |
| Rent | Little or no responsibility for maintenance | No tax benefits |
| Easier to move | No equity is built up | |
| No control over rent increases | ||
| Possibility of eviction |
Realty Icons recommends you get pre-qualified for a mortgage loan so you know how much of a home to search for