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!
|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.