There is a myriad of reasons why people choose to buy their first home. Not only is it part of the American dream. In most cases, it is a valuable investment and opportunity for financial growth. There comes a time in most people’s lives when the question becomes, “Does it make more sense to continue renting or buy my first home?”
Buy vs. Rent Comparison
The chart below shows a cost comparison for a renter and a homeowner over a seven year period.
The renter starts out paying $800 per month with annual increases of 5 percent. The homeowner purchases a home for $110,000 and pays a monthly mortgage of $1,000. After six years, the homeowner’s payment is lower than the renter’s monthly payment. With the tax savings of homeownership, the homeowner’s payment is less than the rental payment after three years. This trend continues over time. Therefore, offering more savings year over year.
Source: Ginnie Mae, (ginniemae.gov)