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Health & Fitness

Is it REALLY Cheaper to Buy a Home Than Rent?

There's a growing mantra in the Real Estate Community that it's cheaper to buy a home than rent. But is that really the case? That depends on a number of factors, so let's take a look!

There's a growing mantra in the real estate community, "It's cheaper to buy than rent, it's cheaper to buy than rent..."  It seems like there's a new article out each week.  Even this past week, Trulia released a new article and illustration, claiming that in 98 of 100 metro areas, it is cheaper to own a home than to rent something comprable.  However, is this really the case, or just a bunch of self-serving salespeople who are trying to manipulate you into buying a home, so they can get a check?

The truth of the matter is that for many, it could be cheaper to buy a home than rent, but not everyone.  Here's where working with a Realtor to consider some of these factors can help:

  1. Monthly costs - When renting a home, you usually have the cost of monthly rent, as well as renter's insurance.  When considering a home purchase, not only will you need to consider mortgage payments, but also mortgage insurance, home owner's insurance, any association fees, and property taxes.  The results could impact your decision one way or another.  (Generally speaking, monthly costs will be less if you buy instead of renting, because investors tend to take the monthly cost and add a premium on top.  That's how they make their money.)
  2. Length of stay - How long do you intend to live there?  Renting may cost you more monthly than owning, but you're not tied down to a property, which gives you more mobility.  Even if the market doesn't decline anymore, owning for the short term may make it more difficult to sell in the future.  However, the longer you stay, the more potential for equity you gain.
  3. Utility Costs - Renting a home means that you have little or no ability to make upgrades to the systems, which means you may be stuck paying higher monthly bills for less efficiency.  Owning a home means that you may have greater up front costs in installing these energy efficient systems, but can enjoy the benefits of lower utility costs down the road.  (Potentially, it'll also increase the value of the home.)
  4. Tax Benefits - One of the main reasons people purchase a home is for the potential tax deductions.  This will vary, depending on your income and other factors, and could be significant, depending on your salary.  Speaking with your accountant or financial planner may be a good idea to determine your personal situation.
  5. Maintenance Costs - Related to utility costs, renting a home means that costs for replacement for most systems and other items are on the landlord.  (Granted, you don't necessarily get to choose what it's replaced with, but...)  Owning a home means that the responsibility is on you, but so is the freedom to make choices to best fit your needs.

In the end of the day, each person's situation is different.  Before you decide to buy a home or that you can't afford one, sit down with a real estate professional with the integrity to help guide you through these decisions, so that you can make the best choice for you and your family.

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For more information, call Gloria Zastko Realtors at 732-297-0600 or visit our website at www.zastko.com.

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