Renting vs. Buying

There has always been a debate on whether it is better to rent or buy a home, apartment or condo. There are many different reasons people decide to rent or buy. One option may be better for one person than the other depending on their income and lifestyle.

These days, most people agree that it is better to buy because you have tax advantages and are able to build equity.

Although buying is not for everyone, and you must make sure you have a secured income before you even think about taking this step, there are many advantages.

According to an article listed on Topix.net’s mortgage site July 27, 2006, entitled, “Renting vs. owning: building equity and tax advantages,” there are a few advantages that many people should consider if they are thinking about buying. Of course, buying a home is something that takes careful consideration and a very stable and secure income. Mortgage payments can be very unpredictable, and often times, there are a lot of strings attached, making it very difficult to move.

The author says that the reason that many renters do not buy homes is because they think that process is too complicated or that the interest rates for mortgages will be too high. This is a very common misconception among many people, and yes, although it is definitely a “process” to buy a home, it is not as bad as many people believe it is.

“For many Americans, owning a home is the cornerstone of their financial wealth. Building equity in a home, combined with tax advantages offered by both federal and state governments, has driven home ownership to record levels. Currently, according to the Homeownership Alliance, 69 percent of American households have chosen home ownership over renting for these, as well as other reasons,” according to the article.

As these statistics show, buying a home has become very popular. Now, it not only provides shelter, but additional cash flow as well.

There are even mortgage companies that have made the home buying process easier than ever.

Over the years, reputable mortgage institutions, such as GMAC Mortgage, have made the home buying process simple and easy to manage for potential homebuyers, especially first-time buyers.

“For example, the gmacmortgage.com Web site offers information on many commonly asked questions about buying a home for the first time. And, for Latino consumers, the company offers bi-lingual loan officers who can provide information either in person, in selected markets, or by telephone.”

The money you could be saving in terms of rent versus mortgage could be a tremendous amount. Even though you may be spending more on your monthly mortgage payments, you will be gaining equity that you can use for other purchases down the road.

“One of the key steps in determining whether you should become a homeowner versus a home renter, is understanding how the amount you dedicate each month to paying for shelter could better serve you through the building of equity. For example, let's look at a renter with a monthly rent payment of $600. Over five years, that person will have spent $36,000 on rent. In 10 years, that number rises to $72,000. That's a large amount paid with no equity in return.”

If you applied that amount to a mortgage payment, you would be gaining equity the whole time! This is one more reason why owning could be better than renting.

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