I just read a wonderful article in the Salt Lake Tribune by a young man who decided to save money for a while before buying a home.
One thing that caught my attention is the fact that he felt he was "throwing away" the $650 a month that he was paying on rent.
Sure, there are many advantages to paying a mortgage over paying rent.
- Your interest payments and tax payments are tax-deductible.
- You gain equity in the home with every payment you make.
- When your home is paid off, your cost of living goes down considerably.
- Owning your own home provides stability as you won’t have to move based on a decision made by someone else.
Still, renting a home is not exactly a waste of your money.
You could equally say that paying on a mortgage is "throwing away" quite a bit of money, as well. In addition, if you trade a monthly rent of $650 for a mortgage payment of $1000, you are already decreasing your cash flow considerably.
Plus, in addition to making your mortgage payment, you also have to pay for unexpected home repairs that crop up. On the other hand, when you rent, the property owner is responsible for all repairs.
Consider The Facts…
In 2005, the New York Times actually did a story that compared home ownership to renting and included the tax breaks that a homeowner would get . They concluded that for many, renting is actually better.
If you are worried about having to pay rent long after your home would have been paid off, consider the fact that the money you are saving on interest and decreased monthly payments and repairs could easily fund a retirement account or allow you to purchase a retirement home with cash.