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Renting Vs Buying

I was reading the latest news blurbs this morning and came across this article about Renting Vs Owning. I felt it might be useful for everyone who is still debating whether it is time to buy. Let us know your thoughts.

Investopedia

By Jean Folger March 27, 2014 5:56 PM

 

One year ago, Trulia’s Rent vs. Buy Report, released by online real estate aggregator Trulia, found it was 44% cheaper to buy a house than to rent. Today, the gap has narrowed, due in part to rising interest rates and home prices. The newest edition of the report finds that buying a home is now 38% cheaper than renting. The report compares costs for a seven-year period using five calculations:

1. The average rent and sale prices for an identical set of properties;

2. The initial total monthly costs of owning (assuming 20% down and a 30-year fixed-rate mortgage at 3.5% interest, as well as annual maintenance, insurance, utility, and property tax expenses) and renting (monthly rent plus renter’s insurance);

3. The future total monthly costs of owning and renting;

4. One-time costs and proceeds (for owning, this includes closing costs and capital gains tax of 15% for gains above the $500,000 annual exclusion; for renting, this includes one month’s security deposit); and

5. The net present value to account for opportunity cost of money (this compares cash flows over time).

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