 |
OWNING VS. RENTING
|
Analysis of Total costs
after 5 years between Owning
& Renting |
|
30-year
Fixed-rate mortgage
|
15-year
Fixed-rate mortgage
|
Renting
|
|
$29,263
|
$34,790
|
$43,540
|
To compare the costs of
renting versus buying, a
calculation was made with
expenses associated with
living in a $50,000
townhouse that is 10 years
old. The owner makes
approximately $25,000 a
year.
In both cases, the cost of
utilities was left out
assuming that they would
largely be the same for
renters and buyers. Also,
our buyer's down payment and
renter's security deposit
were excluded because they
would be recouped at the end
of the residence term
through a sale or refund.
The sample town home costs
appox. $50,000. It carries a
typical association fee of
$65 a month, and the average
property taxes (without
applying a homestead
exemption) ran $1050 a year.
The units would rent for
$650 to $700 a month.
Insurance would cost
homeowners about $202 a
year. Renters would expect
to pay $308 for similar
policies.
For the buyers, we included
$65 a month in
homeowners/condo association
fees and $491 a year in
maintenance costs, the
National Association of Home
Builders' upkeep estimate
for a house built between
1985 and 1989.
Both types of payments rise
$25 a year to include tax
and rent increases.
|
30-year Fixed mortgage
(20 percent down payment)
|
|
|
Monthly mortgage payment
|
Annual total expense
|
|
Year 1 |
$365
|
$4,380
|
|
Year 2: |
$390
|
$4,680
|
|
Year 3: |
$415
|
$4,980
|
|
Year 4: |
$440
|
$5,280
|
|
Year 5: |
$465
|
$5,580
|
|
Subtotal of monthly
payments:
|
$24,900
|
|
Association Dues
|
$3,900
|
|
|
Maintenance
|
$2,455
|
|
|
Subtotal of all
payments:
|
$31,255
|
|
Tax Deduction
|
$1,992
|
|
|
Total
over 5 years:
|
$29,263
|
|
15-year
Fixed mortgage
(20 percent down payment)
|
|
|
Monthly mortgage payment
|
Annual total expense
|
|
Year 1 |
$453
|
$5,436
|
|
Year 2: |
$478
|
$5,736
|
|
Year 3: |
$503
|
$6,036
|
|
Year 4: |
$528
|
$6,336
|
|
Year 5: |
$553
|
$6,636
|
|
Subtotal of monthly
payments:
|
$30,180
|
|
Association Dues
|
$3,900
|
|
|
Maintenance
|
$2,455
|
|
|
Subtotal of all
payments:
|
$36,535
|
|
Tax Deduction
|
$1,745
|
|
|
Total over 5 years:
|
$34,790
|
|
|
Renting
|
|
|
| |
Monthly rent payment
|
Annual total expense
|
|
Year 1 |
$650
|
$7,800
|
|
Year 2: |
$675
|
$8,100
|
|
Year 3: |
$700
|
$8,400
|
|
Year 4: |
$725
|
$8,700
|
|
Year 5: |
$750
|
$9,000
|
|
Subtotal of monthly
payments:
|
$42,000
|
|
Renters Insurance |
$1,540
|
|
|
Subtotal of all
payments:
|
|
|
Tax Deduction
|
|
|
| |
Total over 5 years: |
$43,540
|
|
|
|
