Have you been renting for years thinking you're paying less than your friends who own homes? Maybe you relish the fact that you don't have to pay for expenses like home repairs. Hit the brakes! These expenses are baked into your rent! Let's take a closer look at some of the financial differences between renting and owning a home.
Have you been renting for years, tired of rapidly rising monthly rent, and pondering whether or not you should buy a house? Concerned about paying more per month for a mortgage than you're paying in rent? Let's explore some of the differences between renting and owning a home.
Rent vs. Own
Did you know your mortgage payment could be less than your monthly rent payment? A recent study found that the monthly cost of owning a home compared to renting is lower in 15 of the 50 biggest metro areas in the nation. Consider Pittsburgh, PA where average rental prices are $1445/mo. vs. mortgages at $1250/mo. Imagine saving on your monthly living cost by owning a home!
Monthly mortgage payments are lower than rent
in 15 of the 50 biggest metro areas in the nation.
Paying rent each month instead of a mortgage may seem like a great way to keep your expenses down, but buying a house is an investment that can save you money.
When you own a home, you build equity each time you pay your mortgage. As your property value increases, you build even more equity. You won't find that opportunity in a rental.
Overall Net Worth
As you look toward the future, you will find the wealth you built from homeownership crucial to your overall net worth and your lifestyle during your retirement years. According to a study by Harvard University, homeowners age 50-64 had a net worth nearly 60x that of renters in the same age bracket. Homeowner's median net worth was $292,020 while renters were a mere $4,990 in the same age group.
"...renters age 50-64 had a median net worth of $4,990 while owners of the same age had a median net worth of $292,020 (including housing equity)." ~ JCHS of Harvard University
Fixed Monthly Payment
Another perk of owning a home is a fixed monthly payment. Rent increases each year, adding up to thousands of additional dollars paid to your landlord annually. When you own a home, you pay the same amount every month (unless you choose an adjustable rate mortgage) and build equity.
Rent a Room
Another option that you can take advantage of as a homeowner is renting out part of your home or an entire floor to help pay down your mortgage faster. Heck, you could even rent out your entire house as you travel the world, or consider utilizing AirBnB or VRBO options.
If you're debating whether you should continue to rent or take the next step and buy a home, consider talking to a local real estate agent about housing options in your area. Get pre-approved for a mortgage, even if you aren't planning on buying any time soon, just so you know how much you can afford. Your real estate agent can send you the newest listings in your price range so you know what's available in your area. We wish you the best as you consider whether renting or buying a home is right for you.
Browse our extensive home buying guide to learn more: