Rent vs. Own
Writing out your monthly rent check have you scratching your head, wondering if making house payments would be a better investment?
If your rental payment is $850 a month; you can purchase a $100,000 home with a mortgage payment of just $825.85 per month; that’s $24.15 less money per month than renting! After 5 years, your combined gain of buying a home vs. renting is $23, 835.24!
Payment Considerations
| Rent/Month | Own/Month | Own Financing Details | |
|---|---|---|---|
| Initial Rent/Mortgage Payment | $850.00 | $491.48 | Principal/Interest @ 4.5% 30-yr. fixed rate; 4.591% APR* |
| Renter’s Insurance vs. Insurance | $60.00 Home Insurance $74.37 Mortgage Insurance |
Estimated Home Insurance required Mortgage Insurance required with 3% down payment |
|
| Property Taxes | $200.00 | Estimated property taxes ($2,400 annual) | |
| Before Tax Monthly Payment | $850.00 | $825.85 | Before tax deduction – income taxes |
| Annual Home Maintenance | $1,500 | Estimated maintenance costs home annually | |
| Total Payment Over 5 Years | $52,030.25 | $57,051.00 | |
| Total Tax Savings Over 5 Years | $8,228.08 | Assumes 25% personal income tax rate | |
| Average After Tax Monthly Payment | $867.17 | $813.72 | |
| Average Monthly Payment Savings | -$53.45 Savings | Owning a home savings per month | |
| Total Gain Over 5 Years | $23,835.24 | Total GAIN or savings owning a home over 5 years |
Further Investment Considerations
| Home Selling Price after 5 years | $115,927.41 | Assumes 3% per year home appreciation |
| Minus Loan Balance after 5 years | -$88,423.50 | Loan balance after 5 years repayment |
| Minus Down Payment and Initial Closing Costs with Unearned Interest | -$6,876.00 | $3,000 down payment, $3,876 closing costs includes prepaids and escrows |
| Investment Gain of Buying vs. Renting | =$20,627.91 | |
| Total Payment Savings (Rent vs. Buying | + -$3,207.33 | |
| Combined Gain of Buying vs. Renting | $23,835.24 |
At WCCU Credit Union, we enjoy meeting with potential first time home-buyers – our well-seasoned mortgage lenders know the importance of helping you. From crunching numbers to comparing scenarios, our lenders can guide you through the process now or help you prepare for a purchase in the future.
To schedule a consultation with one of our lenders, contact any of our WCCU Offices.
