Renting a place to live is sometimes not a decision that is made, it’s just what happens. Renting is very convenient for a number of reasons. Who wouldn’t want someone else to worry about the upkeep of the property? Who wouldn’t want to be only contractually connected to the place and able to leave with 30 days notice?
But, is it the best decision?
In some cases, renting is the best decision. In other cases, however, buying a home is better.
Checking the numbers is always a good idea. Consider these numbers when it comes to renting:
Say rent is $700 per month.
In 1 year, you pay a landlord $8,400.
In 4 years, you will have paid $33,600.
And in ten years? $84,000.
Add just $300 to your rent for a possible extra bedroom and you’re paying $1,000 per month.
In 1 year, you pay a landlord $12,000.
In 4 years, your up to $48,000. [A lot more than $33,600!]
And in ten years, you will have paid a whopping $120,000, and hopefully your landlord will send you a nice thank you card. Maybe it’s one of those cards that sings when it’s opened.
I’ve included a chart to help the visual learners.
Buying a home offers several perks, including building equity, increasing net worth, and tax savings.
So, more numbers:
The mortgage payment is $900.
In 1 year, the amount invested in your home is $10,800.
In 4 years, the amount invested in your home is $43,200.
And in ten years, the amount invested in your home is $108,000.
Consider which is the decision for you and the ones you love. If you are interested in seeing what your monthly mortgage payment might be, check out our mortgage calculator. Mortgage rates are hovering around 3.75% for a fixed-rate FHA Minimum Down loan, so be sure to change the interest amount when you calculate your monthly payment.