Is renting or buying a home a better financial bet? Every six months Trulia’s chief economist, Jed Kolko, runs the numbers to answer that question. Trulia’s Winter 2014 Rent vs. Buy Report tells us that across the U.S., homeownership remains 38% cheaper than renting based on the following assumptions: The buyer secures a 30-year, 4.5% mortgage rate; pays 20% down; itemizes his federal tax deductions; falls in the 25% tax bracket; and stays in the home for 7 years.
There are many advantages to owning a home. Depending on where you live, you can pay the same as renting, or even less, while often building equity (the difference in how much the home is worth over how much you owe on it). In addition, you may be able to save on your federal taxes by deducting the interest paid on your mortgage. Other benefits of owning include:
- Stabilizing your payments
- Having a secure place for your family to live
- Gaining a sense of community
The advantages of owning or renting are different for everyone, so be sure to consider your personal situation and long-term goals and then consult with a mortgage loan originator before making your decision.