Renting vs Buying? In our current economy many are questioning whether buying a house really is better than renting.
"But does owning a home really trump renting? With the economy stumbling, house prices falling, and credit tightening, many housing experts are questioning the conventional wisdom. " - Justin Ewers, of usnews.com
With declining home prices, increasing expenses, and greater difficulty in securing mortgages, many people make some valid points in renting over buying a home, when you consider the typical way people pay their mortgages:
- when the housing market slumps, owning a home becomes little more than renting from the bank
- if the down payment was invested in a mutual fund, you might be further ahead financially
- tax breaks of home ownership often are not enough to offset expenses
- home ownership comes with many other expenses - from maintenance to insurance to taxes, none of which build equity
- the average family stays in a house only six years
But what about the benefits of home ownership, when considering whether you should rent or buy a house?
- Have greater control of whether you stay or move - what if the landlord sells or raises the rent too high?
- You can choose to have pets without the restrictions imposed by a landlord
- Depending on your area, you may be able to get more house for the same monthly expense.
- Freedom to redecorate or remodel the way you like - it belongs to you.
You could use a rent vs buy calculator to determine whether you should rent or buy a house, but it is comparing the conventional way people pay their mortgage vs. renting. What if you could build equity and pay your mortgage off quicker than the conventional method?
We just accept the fact that people generally take out a 30 year mortgage, and with compound interest end up paying more than twice the initial price by the time the house is paid off. So even on a 6% interest mortgage, the effective interest rate is over 100%! For the first 5 years, most of your mortgage payment is going to pay interest, with little going to the principle, so financially, you may as well be renting.
There is a better way - that tips the balance in the rent vs buy decision. What if you could build equity and pay off your mortgage in 1/2 to 1/3 the time:
- without refinancing
- without making extra payments
- without changing your budget
Using this system you get the benefits of home ownership and come way ahead financially - even in a slumping economy. For over 10 years Australia has been utilizing this method and now more than 50% of the mortgages are done this way. The system was recently adapted to the U. S. banking system so now you can use “bankers’ math" to your advantage. Whether you currently are paying a mortgage on your home or you are considering your options in renting or buying, this system can help you maximize how you use your money.
To determine how much quicker you could build equity and pay off you mortgage, I recommend you complete the Money Merge online analysis form with your mortgage figures. It doesn't cost anything but a few minutes of your time - but could save you a lot and have your money working for you - instead of the bank.
Wendy Mills is a business marketing consultant and homeschooling mom. She has been running her own home business since 2001 and helping others in marketing or starting their own businesses. She was a full-time Art teacher and wanted to be home with her own children. Now she homeschools her three children and works her business around them.
Since 2005 she has been helping other people to be successful in network marketing, direct sales, and internet marketing; while building her primary business and developing multiple income streams. With the power of the internet, Wendy conducts business training webinars viewed by people around the world.
Wendy also provides resources for homeschoolers and homeschooling entrepreneurs on her Homeschooling-Freedom website.