Is It Better to Buy Or Rent? [Infographic]

Is It Better to Buy Or Rent? [Infographic]

Everyone is talking about how now is a great time to buy a home. And, on the surface, it looks like the perfect time. Home prices are low, and mortgage interest rates remain at near-record lows. There is some argument, though, that it might be better to buy a home in six months; without the home buyer tax credit to help keep home prices higher, some argue that another dip in prices is likely. However, whether you are really ready to buy a home has little to do with what is happening in the housing market; more important is what is happening in your personal finance world.

When many people start thinking about purchasing a home, they usually get excited about figuring out how big a house they can get, and use online mortgage calculators to help them estimate monthly payments at a specific interest. What many of these calculators don’t include, though, are additional costs. We often forget that homes need to be maintained — by the owner. Other costs come into play as well, from property taxes to insurance to upkeep. Additionally, when many people move, they do so into a larger place. This often requires that you spend more in utilities, and you may have additional expenses, such as buying furniture, yard maintenance, and more.

The following infographic from CreditLoan.com offers a sobering look at how much it can cost to own a home. It also compares renting to buying, and your costs in each case (click here for a larger image):

Is It Better to Buy Or Rent? [Infographic] 1

You can experiment with your own set of numbers at New York Times.

There are a number of financial experts that recommend you plan to live in your home for five to seven years if you buy. This infographic backs that up by showing that it takes five years for a home purchase to be “worth it.” It also brings up the point that sometimes it isn’t always better to buy. Especially right now, there are plenty of folks (many of them real estate agents) urging you to buy because a home is a “great investment.” There is debate over whether or not a home purchased as your residence is truly an investment, and in many cases, by the time you add up the costs and interest, you are unlikely to get it all back, even with tax advantages and if your home increases in value.

Before you run out, willy-nilly, to buy a home just because it is such a good deal, it is a good idea to carefully consider the costs. You want to be able to afford your home, since it is a Major Financial Commitment. If you are thinking about “upgrading”, you need to factor in potential losses from selling your home in this market. My husband and I have just decided not to buy a new place, even though we have found some screaming deals, because the time, hassle and loss involved in selling this home are so great.

Finally, consider other options before you buy a home. You might be able to take the difference in cost between buying and renting and invest more every month. There are those who maintain that they don’t mind renting the same home or apartment for years. They don’t have to take care of maintenance, and they can invest the savings and end up with more in the long run.

Update: Wisdom from our readers

Many of our astute readers have pointed out that all of the factors are not present on this infographic. So we’d like to take a moment to point out that, as you might expect, whether buying or renting makes more sense for you depends on a number of individual factors, including your local housing market. Here are some of the other points that readers have made about what is missing from the infographic:

  • Tax deduction: This infographic didn’t figure in the fact that you can deduct your mortgage interest from your taxes. This is an itemized deduction that can lower your taxable income. Realize, though, that your interest payment goes down as the years progress, so the benefit you get from this diminishes. Property taxes can also be deducted on your tax return, and that can be a benefit of homeownership.
  • Appreciation: Your home may not always appreciate in value. Indeed, a recession can set you back a long way on the path to appreciation. Whether your home truly appreciates in value depends a great deal on your local market.
  • Home improvements: It’s important to note that even though home improvements can add value to your home, it is not an increase that equals 100% of what you spent. If you spend $1,000 on home improvements, your home may only increase in value by $700 or $800. Rarely do improvements add to the value of your home to the amount you spent on them.
  • PMI: This infographic leaves off PMI. If you don’t put 20% down, you have to pay for private mortgage insurance, and that adds another cost to home ownership.
  • Rental utilities: Unfortunately, the infographic fails to take into account that many renters have to pay their utilities. This is a cost of renting that needs to be considered, as does the difference between how much utilities will cost in your new home.
  • Investing in something else: If you can rent for much less than a mortgage, it is possible to the difference into another investment. Indeed, since by the time you pay interest and pay for increased utilities and maintenance on a home, it is possible that you will not actually, dollar for dollar, break even on your home — even if it does appreciate in value. Some maintain that you are better off investing your money in bonds, index funds or something else likely to offer better returns.

As always, you need to run the numbers for yourself, since situations are different, and market conditions vary.

55 thoughts on “Is It Better to Buy Or Rent? [Infographic]”

  1. I would love to buy my own home at the moment buy i know i will be moving soon so renting is a better option at the moment. Nice post.

  2. The numbers that they used there for a home is scaled pretty low to make the case for buying a home. The assumptions that a lot of people also ignore is that a home is not going to up in value as a guarantee. The breakeven point can be in decades, not years.

    I recently did a series on the myth about owning a home and with my own personal experience, can show that even with 10 years in a home, we barely made breakeven. This is with buying in the last recession, at what seemed to be the bottom of the market.

  3. I really like how you broke down the differences between renting and buying. I remember when I went to buy my home. Everyone said its about the same cost to rent as own. Boy, were they wrong. As you mentioned the cost of landscaping, utilities, home owners insurance, taxes taxes taxes, and all the other costs that come with a home. It was not even close to renting. But I am still glad we bought the home. Thanks for the information

  4. What about the money saved by not paying the mortgage put in some sort of investment if renting? It’s slightly one sided if you take into account the profits made from the potential house sale and not any potential investments made while renting.

  5. It always depends on the individual and their personal financial situation at the time. What it comes down to, is do you want to sacrifice a little now for a better return later?

  6. This analysis assumes the value of the home will rise each year. This is the same sort of thinking that led to the financial meltdown. Banks were willing to lend to unqualified buyers because they assumed the value of the property would always go up; thus if the owner defaulted, the bank made money.

    But why should real estate prices always go up?

  7. “The assumptions that a lot of people also ignore is that a home is not going to up in value as a guarantee. The breakeven point can be in decades, not years.”

    @Kim – That’s a good point. The number shown is just an example. The real number will be different for everybody, e.g., depending on how much you bought your house for, where you live, any improvement you made, etc. Having lived through the recent crisis, I think we all know that appreciation is not guaranteed — however, I believe that in the long-term home value tends to keep pace with inflation.

    “What about the money saved by not paying the mortgage put in some sort of investment if renting?”

    @Jon – Good catch. At the minimum, we could use 5-year TIPS as a proxy investment to calculate this.

    “It always depends on the individual and their personal financial situation at the time. What it comes down to, is do you want to sacrifice a little now for a better return later?”

    @Alex – Amen! I would personally pay a slight premium to own my own home…money is not everything.

    “This analysis assumes the value of the home will rise each year. This is the same sort of thinking that led to the financial meltdown. ”

    @Chuck – Agreed. Please see my response to Kim above and let me know if you agree about the long-term trend.

  8. If you purchase a home, you can write off the mortgage interest on your taxes. I don’t see that noted on here. In this example, that’s over $8000/year less that you pay taxes on. How doesn’t that throw off the whole analysis?

  9. @Mark in MA you can deduct 1/2 your yearly rent from your state income tax. Don’t know about any other state.

    I would strongly recommend people run the numbers themselves. If you can get the cash together for a 15 or year mortgage, you’ll find the break even point to be MUCH earlier.

    Also, if you change the annual increase in the value of the house to 5% per year, which is pretty easy to do even in a flat market with a little sweat equity and not much $$$ on the right house, you’ll find the break even point is 2 years. You can never increase the value of your apartment.

    And that’s a major distinction. If you think you’re the sort of person who would work to improve the value of your house, buying is almost ALWAYS better.

  10. What this infographic fails to take into consideration is that buying a home is an investment, with all the associated risks and possible benefits.

    In the end, whether buying a home was a good choice is something one will only know in hindsight, since markets are almost by definition unpredictable.

    So when buying a home, the buyer needs to be confident about the future housing market as well as about his own ability to deal with any possible losses.

    The nightmare scenario with buying a house is not to lose a small amount of money compared to renting, but to be forced to sell at an inopportune moment (e.g. after losing one’s job) and sustain a significant loss, ultimately leading to such an amount of debt that the outcome is bankruptcy.

  11. How does this change if the cost of the home is $122,000 or $322,000? What is the break even point when the cost of the home goes down or up. Obviously closing cost and down payment drop based on this, but what about the other factors at play?

  12. C’mon now. A place with an average rent of $1500/month won’t have houses (livable ones at least) for $223,000. I live in Portland, Oregon, a place with an average house cost of $280,000 and average rent of $800.

    Then there’s the paltry $1200 a year for renovations? $1200 for maintenance? $1200 for utilities? WHERE? One trip to Home Depot is worth $1200. One repair costs at least $500, often far more. Utilities in a house for only $100/ month? Get real!

    Nice article from the National Association of Realtors. Just don’t believe it. Buying a house these days is the new road to serfdom. Just ask the 25-30% of new buyers whose houses are worth less than when they bought them. They’re looking at a Japan-like deflation of their home prices for decades.

  13. Miranda, nice article and graphics. We have been both owners and renters over the last decade. One point that I’d make is that renting offers a flexibility that ownership cannot. For instance choosing to rent in a better school district is a benefit to our children. Also renting allows us to be flexible and move relatively quickly to areas of economic opportunity. In the current economic environment, I prefer flexibility. Also I think the financial assumptions of ownership underestimate the growing burden of property taxes. Thanks for getting the discussion started.

  14. The other reality I’ve seen as both a renter and a home owner is that you tend to spend more money on your home fixing up things, replacing things, etc. These fixes never earn back 100% of value on a house sale so they are money losing. Renters tend to upgrade and replace absolutely nothing. I know a guy who bought a brand new home with a great back yard. His wife is making him redo the backyard to the tune of $40,000.

  15. ^ Agree with MarkS.

    This article is totally inaccurate if you fail to include the deduction of interest and property taxes on tax returns. In your example, with about $10,700 in interest and prop taxes, you’d be saving at least $2,000 per year using just a basic 20% marginal federal tax rate. In CA, you’re probably looking at at least 30-35% tax savings, or $3,500 per year for buying a home. I’m using 30-35% tax rate in CA because most people who buy a house here in CA are at least in that tax bracket.

    You really should revise the article for this major oversight…

  16. @ Dino,
    I agree 1000%, in addition buying a shack vs. renting in a decent area – Hmm, I’d choose to rent. In our market (SLC) it has actually been much better to rent over the past 10 years. We have recently bought a home, but it wasn’t because we were saving money on it. We are spending almost twice as much now, and with upkeep and maint. I don’t forsee it really changing that much. All of these types of “analyis” are always skewed. Let’s see a real study, with real homes (simillar), with real costs. I’ve spent about $2k at home depot this year alone. When renting, I just called the landlord.

  17. Here’s my question:

    Is it financially smarter to wait 3 years and pay 100% cash for a house (~ $150K) or put $30K down now and take advantage of the low home prices/interest rates?

    It’s not a given that home prices increase enough in the next 3 years to keep me from saving 100% for a decent house, but it’s also a possibility. Thoughts?

  18. I’m a little surprised at the comments. I thought this article was too conservative towards renting yet most people are complaining about the housing being unrealistic. I’m not sure about other locations, but in the Dallas area, the only rentals with included utilities are in areas likely to get you shot. My last apartment was 800 sq ft with 1 bed 1 bath, was over 20 years old and needed updating, and was renting for $850/month. If you wanted a garage, that was $200 more per month. Utilities were outrageous because they had the lowest grade/cheapest air conditioner available which was very inefficient. It didn’t matter to the landlords because they don’t pay the electricity bill.

    In comparison, my 2000 sq foot house included 3 bedrooms and 2 bath and a 2 car garage. My mortgage (P+I) is 707.81, property taxes in Texas are higher, but that runs a little under 300 month. That basically puts me back at the same cost as the small apartment 10 mins down the road. Insurance is more expensive for the house than renters, but my utilities were actually cheaper because of the summer electricity since the A/C runs 9 months of the years. Sure there are other maintenance, lawn care, etc.

    I didn’t look at it as an investment, but as a better place to live. Even with the additional costs, it was so much better than the small space, with people messing with my car, and other factors. Just my German Shepherd adds much more to my life than I could have in that small apartment, she would have hated that. I don’t think I could even consider wife and baby at that time.
    So, yeah, you pay more, but you get more. The root costs for me were nearly identical for me, so just as a comfortable place to live, the house must be about 15x better — I could probably name 15 things the house allows/has going for it for each thing the apartment had. Sure there are a lot of extra expenses, but you can also do so much more.

  19. I don’t see how this is apples to apples – why are you comparing the purchase of a house to the rental of a one-bedroom apartment? You can purchase condos and rent houses. Looking at purchase vs. rental of a house or purchase of a condo vs. rental of an apartment seems like a more fair comparison. This will even out a lot of the monthly mortgage/rental, furniture, utility, and possibly yard-care costs.

    Other things:
    – If you’re going to call out the cost of a washer/dryer, apartments in Boston don’t generally come with washer/dryer hookups so you’re stuck going to a laundromat.

  20. So many people just jump into buying and assume it’s better than renting. If you do the math, unless you’re in it for the long term, renting is much better — the big assumption here is that you’re investing your money wisely and not blowing it on, say, trips to St. Kitts to see drunk monkeys.

    This is especially true in NYC, where I live, with most of the property being personal (co-ops) versus real (condo).

  21. For me, I was comparing a one bedroom apartment to a 3 bedroom house because the price was generally equivalent. At the time, I had friends renting a 3 bedroom house about 15 miles further outside of town in another suburb for $1350/month. So, just base costs were double what my mortgage is. Even factoring in property taxes and insurance, it was cheaper to buy and I didn’t even have to spend another 30 mins in my car to get to work. (My house is 17 miles from the office and it takes 40 mins with good weather and no accidents, up to 3 hours if we get an ice storm)

    Personally, I wouldn’t buy or consider a condo because it just seems stupid. You get the bad parts of owning, plus the bad parts of apartments being on top of other people. I never looked at renting a house, because it was so much more expensive as I’ve described already. So, I am basically left with comparing a small apartment with a house.

  22. The Math above is done completely incorrect.

    Home Cost: $223,500
    Down Payment: $22,350
    Financed Amount: $201,150

    at 5.5% over 30 years you are looking at a monthly mortgage of: $1,368.40, which is far and above the mortgage that was calculated above: $967.75. A Monthly difference of: $400 or $4,800/year. This also doesn’t include the PMI that will be required since you are not meeting the 20% equity value in the home.

    Also a 1500/month one bedroom apartment? Is not going to be in the same area as a 3 bedroom house with the price of $223,500. In San Diego you can rent 2-3 bedroom apts and homes for around 1800-2000/month…which is far below their purchase price of $500K+ monthly mortgage rate.

    There is a clear bias in the posting. Please tell all these people who have lost 50% of their homes value that their home increases at 1% per year.

  23. I guess if this is a representation of rent and mortgage cost in NYC then maybe but here in the south I am sorry but I know very few people that are paying over $20,000 yearly in rent. I have a nice 1 bedroom apartment with many great amenities like wonderful fitness room, pool, free water, subsidies on Comcast cable and high speed internet, security alarm at only $12 per month and it is monitored, security gate and my monthly rent is almost $800 monthly and can find several apartments a bit cheaper here in Georgia.

    Even when you add utilities, some maintenance cost, furnishing cost, rental insurance I would still wouldn’t pay more then $15,000 a year. That is not representative of cities like Atlanta, Jacksonville, Birmingham, St. Louis, Dallas, New Orleans, Orange Grove- all cities I have resided in.

    Follow me on Twitter: datd00disit

  24. Renting is better because your new wife will eventually take half the house that you don’t really own and stick you with the mortagage payments forcing you to share a one bedroom with a smelly old dude or a dorm style apartment or worse…back with mom and dad.

  25. This is a great article. I have owned several homes in the past. I have been single for over 16 yrs. and personally love the convenience of renting vs owning. I am a DIY’r from home to yard. The one thing that is not factored in above is the remodels, landscaping, upgrades, or other “vices”, & etc. This was my downfall. Where it may have been cheaper to own, it cost me way more with my vices.
    At this point in my life, I much rather prefer calling when there is a maintenance issue, appliance requiring repairs, (in Texas heat) air conditioning problems! I can do container beds or pots to satisfy the need for “worm” therapy through plants.

    People may look at me as unsuccessful. If I lived in NYC, or even another country, home ownership is not regarded as successful. Since I am retiring this year…15 years early, I am not confined to having to stay anywhere b/c of the current housing market. I can live in an apartment anywhere in the world! According to Robert Kiyosaki, unless your house is making you money, it is a liability. I prefer building my assets instead!
    I love the freedom of choice.
    Thanks so much.

  26. This is, of course, minus the housing collapse like we have seen over the past few years. Where’s your calculation when the market corrects 30%? Where’s your calculation for time to recover from a decade of negative equity after a housing collapse?

  27. Excellent article. I always knew that for the first few years renting was the better choice, but it’s interesting to see a real breakdown of finances to get it down to an exact time period. Kudos.

  28. This infographic doesn’t really compare like apples. There is a cost benefit to having a house. You can compare a 1 bedroom apartment and renting a 3 bedroom house, guess what, the 3 bedroom is more expensive. What would be a much better comparison is at least a comparable standard of living. Where I live, a mortgage payment and a rent payment are almost equal for the same size place. That infographic would show the rent vs buy to end around 3 years and not 5.

  29. @DINO

    What are you talking about? Maybe in downtown Portland..

    I just moved from a 3 Bedroom apartment in Hillsboro paying $1300/mo(with 6 month lease) to a newer model 7 year old house in a great neighborhood for 200k.

    Just because they dont exist downtown in the Pearl in downtown doesnt mean they dont exist 15 minutes away in Tigard/Hillsboro/Beaverton.

  30. Not comparing Apples to Apples here. All things being equal buying is always the best option, as the only non returnable expense would be property tax, a percentage of mortgage and interest costs, and maintance costs. These expences fall far far short of the $1,500 return of deposit from renting. Renting a house almost always comes with utility costs and yard upkeep.
    Example: My sister rented for many years, paying about $500 per month rent. She still had to pay utilities and yard mantaince. When she moved out of the rental house that was it. $0.00. She purchased a home and lived there ten years paying the same $500 and then sold it and banked a check for $47,000 after paying off the mortgage. She took her $47,000 and bought a small house on a lake and now her only expence is utilities and upkeep.
    Like I said, add it apples to apples and renting never wins, year one, or year ten.

  31. My mortgage interest deduction saves me thousands of dollars on my federal taxes in the early years of the amortized mortgage when the payments are mostly toward interest. Where is that credit represented in the Buying scenario?

  32. My question is the same as Phil’s above me. There is a major difference not being accounted for in this comparison and that is the major tax deduction that can be taken on interest paid on a home. Like Phil, this is a decent sized chunk of change even in the first year alone.

  33. One other small item missing is that, by owning a home, I can rent out rooms in it. For me, this is where I’m very much ahead of the curve.

  34. Taxes on a home is $2,500 a year in an area that is renting at $1500 per apartment/home? what kind of crack is the creator smoking, you need at least $10,000 a year to cover on a good home and area.

  35. The tax deduction of the mortgage interest is huge. Most middle age americans are in the 30% tax bracket. Thats 30% of $42,593 or just over $12,000. Which lowers the total due after 5 years by 12,000 from 102,000 or roughly 10%. So basically you are saving 10%. That’s pretty good.

    Also other intangibles, like not having to listen to your neighbors yell at each other (and do other stuff) is well worth it.

  36. Good article. Some people may buy a home thinking that they will stay in it long enough to make it pay, then their life circumstances change and they move sooner than planned. Marriages and divorces, additional children, and job changes frequently require moving. If any of those seem likely in the next five years, it may not be the time to buy a home.

  37. Seems like this article glazes over so many tax incentives that a home buyer can use. Obviously buying a home and selling it every few years will eat up your equity but the bottom line is the tax system is set up to favor home buyers. Renters earn no deductions (minus crp deductions in some states and earn no major credit lines on their credit report. If your bad with money buying anything as long term as a home is going to be a disaster. However if you start building equity at a young age it will open so many doors for you in the future.

  38. There is a large variability of rents versus purchase prices throughout the country. As someone pointed out above, the rental rates in Provo/Salt Lake City Utah are much lower than current mortgage rates.

    The tax deduction argument isn’t so clear cut since over time that deduction decreases. If you move and get a new mortgage (or refinance), you lose more money to interest. If you keep moving and “upgrading”, thinking you will escape the increasingly maintenance and renovation costs, you will consume all that capital you think you are saving.

    One factor often ignored is that general upkeep on a home is much more expensive than most home owners recognize. Minor expenses are often casually dismissed. For example, gas for the lawn mower (and then replacing that lawn mower ever few years.) Lawn and garden tools. I’ve owned and rented homes and townhouses and calculated that owning a home costs $200-$300 a month in sunk costs that have nothing to do with a mortgage.

    Finally the numbers from the chart above are absurd. $100 a month in utilities? Renters insurance of $267? House inflation at 1% but renter inflation at 3%? On top of that the actual mortgage numbers are wrong by a huge margin.

  39. Was renting a very nice 3 bedroom house in North San Diego county for $1750/ month. Was required to maintain the yard, and pay all utilities. House was put up for sale and my wife and I bought it (NOT A LEASE OPTION). We used our security deposit for half the down payment (2xMo rent + dog deposit). Total out of pocket was $4200 (FHA Loan). New mortgage payment, including taxes, insurance and PMI came out to $1572.65. Same utility bills, same lawn care costs, same everything, EXCEPT now I pay $175 dollars less every month. Not to mention the $8k tax credit we received and the $20k in equity we’ve earned over the last 10 months. Renting is for suckers with bad credit and zero direction. Just pay your bills, ya dirty hippies! And never ever ask permission to paint.

  40. I have to agree with the folks who pointed out the tax deduction for interest paid on mortgages — that is a huge subsidy to owners, and one that is missing from this

    It totally changes the calculus

  41. Two major flaws with this infographic as pointed out by others:

    1) Tax savings not accounted for buying a home
    2) Utilities are not accounted for for renting an abode

    Those two factors make for a major difference in the break-even point. But, as with all things in life, individual experiences will vary. As a whole though, buying is better if you will stay put for any length of time. Real estate does appreciate over time (there will always be fluctuations in the market). Just be smart with your money and do what is best for your own situation 🙂

  42. FUZZE

    If you bought a house for 200K in the Portland metro area, it’s got to be a shack or serious fixer-upper.

    Don’t get me wrong, houses are almost always a must for families but not for everyone. And they all lose money in the long run.

    Those of you crowing about the mortgage deduction (which isn’t as lucrative as it’s made out to be) are ignoring the fact that after interest payments, your house will cost you at least double the purchase price if not more.

    Houses used to be a good deal versus renting until the capitalist predators started focusing on squeezing the life out of housing. They took full advantage of the deeply-ingrained myth that owning a house is “the Dream” or a higher class way to live.

    As for noisy, bad or unpleasant neighbors? When I owned houses and had bad neighbors I was stuck. There’s this little attitude among homeowners that “I can do what I want since I own, despite the fact that my neighbors are right next door and across the street.” Feuds among neighbors are legendary.

    When you rent, you just move.

  43. Having once lost a lot of money on a house (after the recession in the early 90s) I can vouch for the fact that it isn’t always the best thing to do. Lots of people urged me to buy a house “because it was a great time to buy” but they were all wrong!

  44. I certainly don’t quibble with the basic conclusion that if you will live in a house for a short period of time, it will be more expensive than renting. Nor that people considering buying a home often neglect to factor in the cost of maintenance.

    That said, this article seems highly biased to renting.

    As others have noted, the tax advantage is brushed off with a sentence and not included in any of the numbers. But the tax savings can be over 30% of the mortgage payment initially. Sure it goes down over time as the amount you pay to interest goes down, but the main selling point for renting is when you are only living there for a short time.

    A lot of this comparison is based on assuming that you buy a bigger place than you rent: You talk about needing more furniture and paying higher utility bills. But then the conclusions are unrelated to the analysis. You’re not comparing renting versus buying: you’re comparing living in a 1-bedroom place to living in a 3-bedroom place. If you want to compare renting versus buying, you should compare renting a 3-bedroom apartment versus buying a 3-bedroom house. Of course a bigger living space is more expensive than a smaller living space. This analysis is like observing that a red SUV costs more than a blue bicycle and then concluding that “red vehicles” are more expensive.

    I’d also quibble with numerous details. Like $1250 to buy a lawn mower? I paid $200 for mine. On the other hand, one could argue that for a truly fair comparison, you should count the cost of hiring someone to mow your law. I’ve always thought that one of the advantages of renting was that the landlord takes care of mowing the lawns and shoveling the snow and all that.

    And assuming renters don’t have to pay utilities? I don’t know where you live, but I’ve rented several apartments at one time or another and while water has sometimes been included in the rent, I’ve always had to pay my own heat, electricity, and phone.

  45. this isnt quite accurate. i think this is very dependant on area. in iowa were renting our last home- 650/mo. yard/fish pond care- 125/mo. renters insurance- 43/mo. 818 total.

    down payment on a 100k home- 4,283- closing costs waived. yard care- self- free. insurance,taxes,payment on 35year mortgage- 803/mo.

  46. Great infographic. One thing I find is that when comparing renting and home ownership the hidden cost of home ownership are never taken into account.

    You will pay more for furniture in a new home, draperies, flooring etc just because you own your home. If you are moving to a nicer neighborhood you will also buy a nicer cars(s), send your children to a better (and more expensive school), and enjoy the trappings of a better life too.

    The funny thing is you can live a same home as a renter or an owner yet your spending habits are radically different even though the location and building are the same.

    The truth is the only reason home ownership works for many is because some day they pay there mortgage off. Not having to pay a mortgage some day can make a huge difference in your standard of living when you retire.

    Then many end up selling because the cost of up keep in much harder to pay for on a fixed income.

    The good news is your bank, home depot, and your local furniture store have made thousands off you.

  47. It’s surely true that people who buy their first house often don’t consider the cost of maintenance. That’s probably the biggest unexpected cost for many.

    I was thinking of “big maintenance” when I wrote that sentence — repairing the furnace or replacing the windows — but there’s also routine maintenance, like mowing the lawn and painting. If you pay someone to do those things, that’s a significant added expense. If you do it yourself, that’s taking up your time. Maybe you don’t mind taking the time. Maybe you like to mow the lawn, or you see it as a form of exercise and if you weren’t outside mowing you’d be inside on a treadmill anyway. But you should take it into account when buying.

    Another factor people often don’t consider: As we all know, prices tend to go up every year. If you buy a house with a fixed rate mortgage, this will not go up. But rent will. So a mortgage that is barely affordable today will tend to get less painful as time goes on.

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