Is owning really better than renting?

Question

I have always heard that owning a house is better than renting, but I don't really know what to believe anymore.
My fiancé and I just signed a new lease. We are renting a brand new 3 bedroom house with a pool for less than 800 a month (from a friend of the family) I think that this is an amazing deal. I really wanted to look into buying a starter home (around 150-175K) but with the added Taxes and Insurance (we live in Florida, near the water) it would have been at least another 600-700 a month added to the principal. My friends who recently became first time homeowners are struggling each month, and I can't imagine myself wanting to be in that kind of situation, sacrificing other things, just to call myself a homeowner. Am I wrong in my thinking?

Answer 1

This is simple...Owning long term is always better then renting, I see it all the time in real estate,couples spend 30 to 40k renting over the years and have nothing. If they had bought a home they would have equity, they could sell and get some back or they could have improved their home. simply put...you could rent
and lose all the money you put in the property or
you could buy and get money back when you sell, also the tax advantage is nice as well

Answer 2

Buying versus Renting

There are many advantages to buying a home versus renting one. View these advantages in the Buy vs. Rent Comparison Chart, or view a financial comparison of buying versus renting in the Buy vs. Rent Calculator.

Your income, savings, and monthly expenses play an important role in determining how large a mortgage you can afford. To figure out the amount you can afford, please click Affordability.


Savings: Buying


In many cases, the amount of money a renter spends on rent can be about the same as or less than the amount a homeowner spends on a mortgage. With the tax benefit for homeowners, the savings can be significant.

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%
The homeowner purchases a home for $110,000 and pays a monthly mortgage of $1,000
After 6 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 3 years

Years Rent Payment Mortgage Payment Monthly Difference After Tax Savings Yearly Difference After Tax Savings
1 800 1000 -200 -50 -2400 -600
2 840 1000 -160 -10 -1920 -120
3 882 1000 -118 +32 -1416 +384
4 926 1000 -74 +76 -888 +912
5 972 1000 -28 +122 -336 +1464
6 1021 1000 +21 +171 +252 +2052
7 1072 1000 +72 +222 +864 +2664
8-30 Savings increase every year

Monthly Expenses: Buying

Your rental company takes part of your rent payment to cover certain housing expenses. When you decide to purchase a home, you accept responsibility for paying for these expenses (listed below). They are additional costs to your monthly mortgage payment and should be included in your budget estimates:

Property Taxes and Special Assessments
Home/Hazard Insurance
Utilities
Maintenance
Home Owner Association (HOA) Fee: Doesn't apply to all purchases. It pays for trash and snow removal and maintenance of common grounds if applicable.
Membership Fee: It may pay for recreational facilities and other services (cable TV).

Answer 3

It comes down to a question of affordability.

I agree w/ you, that struggling to make the mortgate payments just to say you're a homeowner doesn't seem to make sense. After all, there are many homes in foreclosure these days because people are unable keep up w/ the payments. At least w/ renting, you're just kicked to the curb, literally.

Over the long haul it would be nice to have built up equity in real estate, but for some people it may not be worth it, as long as you have other ways to build up your net worth (e.g., stock and retirement investments).

Answer 4

Jesslyn,
Owning a house is NOT the right thing for everyone.
most people are CONvinced owning a house is good for them.
as your friends are learning the bankers win and they will lose.
a house note (principle and interest) should equal one weeks take home pay only.
the next one - two weeks take home pay are spent on taxes utilities transportation empty house syndrome yard upkeep and a dozen other things.
now, do you have emergency funds and layoff funds of 3-6mths?
you need to decide if you want to be anchored by the house or do you want flexibility in address.
do you want to pay 1000$ for every 250$ tax break that you may not actually get to use?

the above answers are standard answers but did you know that foreclosuers are at the highest levels since the 70's