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The Cost of Renting vs Owning

There’s more to comparing the costs of renting and owning than the dollar cost of payments.

 

Even with numbers like these, some still say renting is better:

“Investing in a home is riskier than renting.”

No risk, no reward. Besides, even studies conducted by the Federal Reserve show that owning can provide a net worth that is from several to hundreds of times higher than that of renters.

“Home values have dropped in recent years.”

Which is one reason why ownership may now be less expensive than renting. As well, recent price trends in many areas have reversed, and values are once again on the rise.

“The tax deductions aren’t worth it.”

Some people benefit from claiming deductions for mortgage interest and real estate taxes. Others find a standard deduction more valuable. Even if you exclude the tax benefit, the real cost of owning can still be less than renting.

Equity for you or equity for your landlord?

With more or less equal payments, owning will always have an advantage in that you’re paying down principal and earning equity in your own home rather than the landlord’s.

Still renting and want to explore the path to ownership? Reach out, and we’ll be happy to help.

To learn more about our company and mortgage products, please feel free to call Dan Longman, President of Priority Lending Corp, at 954-438-3776 ext.11 or email me at prioritydan@bellsouth.net. Visit us online at www.prioritylendingcorp.com 

Factors used: $500,000 purchase price, 20% down, $400,000 30-yr. fixed loan at 4%/4.25% APR. Principal & Interest payment = $1909.66, taxes = $520.83/Mo. (1.25% of value), insurance = $120.83/Mo. ($2.90 per $1000 of loan amount) & maintenance = $208.33/Mo. (0.5% of value). Tax deductibility at 28%. Tax savings, principal paid and appreciation averaged over a 5-year period. APR calculations based on closing costs of 3% of the loan amount. Actual fees can be less.

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