Why Rent When You Can Buy
Buying a first home can be an intimidating process. But the
first step is making those first decisions:
If you are still struggling with those first decisions, here are some facts that might help you make that first step towards becoming a home owner.
You cant afford NOT to buy a home!
Over the last ten years, the cost of rental housing in the U.S. has increased an average of 3 percent per year (In the Portland area rents have increased 3.6% this past year). That means that an apartment or home renting for $1000 per month will cost more than $1300 per month in ten years. If you rent the same home for ten years, the total amount you would pay for rent will equal $137,567.
Tax Advantages of Owning a Home Results in Savings
None of that $137,567 is returned to you, either through savings or as an investment. Home ownership, on the other hand, has tax advantages over renting a home, and those advantages can help you save money. Unlike your monthly rent, part of your monthly mortgage payment comes back to you in tax savings. Heres an example.
You purchase a home that costs $210,000. Your down payment is $10,000 (Your bank or credit union may also have "no money down" home purchase plans available). You finance the balance with a 30 year fixed rate mortgage at 6.5% interest. Click here for a mortgage calculator for other loan amounts. Your monthly payments (not including utilities, insurance, etc.) are:
You actually save $390 a month by owning your own home. On a yearly basis, the saving is even more dramatic:
Home Ownership is a Good Investment
For the majority of Americans, their home is their largest
financial asset and a major part of their investment portfolio.
Its a good thing, too, since stock market value has declined
since 1998, while home price appreciation has increased. The
National Association of Realtors estimate that home value rises,
on average, by 4.5% a year. Thats a steady return on investment:
Our own home is a much less volatile asset than stocks, bonds,
or mutual funds.