Is Buying a Home Really Cheaper than Renting?
Is it really less expensive to buy a home than rent?
Let’s look at the math…
According to US News the average rent in the country is just $865 a month.
In contrast the nationwide median home price at the end of the 1st quarter 2012 was $158,100. With a 20% down payment and based on today’s average 30 year fixed mortgage rate of 3.67% the monthly principal and interest payment would be just $145.01.
Of course there are also additional expenses which come along with buying a home which is where many find it confusing as to whether buying is really cheaper. This can include insurances, property taxes, association fees and additional maintenance costs.
However, with current rates as low as they are most will find that buying a home still comes out less expensive.
What the pessimists won’t tell you is that there are also many cost savings that come with buying a home too. Think about it; no more moving costs, no more rent hikes or being at the mercy of your landlord. Plus of course there is equity appreciation. While speculative buying is not wise and there will always be market fluctuations but ultimately the windfall in appreciation over time, even at low growth rates is the best wealth building tool most individuals have available to them.
The benefits of buying a home don’t stop there either. Some are not immediately and directly financial but do pay off big time in the long run. Others provide more peace and security which in fact is probably far more valuable than any dollar amount.
While no one should over extend themselves and buy a home if they really cannot afford it only to lose it, those who can afford it will find the sooner they take the leap, the sooner they can begin reaping the benefits.