Comments on: Is It Better to Buy or Rent? http://www.debtfreeadventure.com/is-it-better-to-buy-or-rent/ Pay off debt. Save. Give. Live your mission. Wed, 08 Feb 2012 17:36:06 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: swetha http://www.debtfreeadventure.com/is-it-better-to-buy-or-rent/#comment-17575 swetha Tue, 01 Nov 2011 16:07:25 +0000 http://www.debtfreeadventure.com/?p=5403#comment-17575 can any1 say the logic behind rent vs buy calculator can any1 say the logic behind rent vs buy calculator

]]> By: SB @ One Cent At A Time http://www.debtfreeadventure.com/is-it-better-to-buy-or-rent/#comment-17272 SB @ One Cent At A Time Tue, 27 Sep 2011 00:04:09 +0000 http://www.debtfreeadventure.com/?p=5403#comment-17272 Very few among us ever do a calculation before buying home. In my blog I encourage people to do basic math check on buy vs rent. As per my own calculation in my area renting is better while saving for home buying. This is the calculation, if any one interested.. http://onecentatatime.com/should-i-buy-or-should-i-rent-a-calculated-approach/ Very few among us ever do a calculation before buying home. In my blog I encourage people to do basic math check on buy vs rent. As per my own calculation in my area renting is better while saving for home buying. This is the calculation, if any one interested..

http://onecentatatime.com/should-i-buy-or-should-i-rent-a-calculated-approach/

]]> By: Larry http://www.debtfreeadventure.com/is-it-better-to-buy-or-rent/#comment-16937 Larry Sun, 14 Aug 2011 16:45:46 +0000 http://www.debtfreeadventure.com/?p=5403#comment-16937 Considering the country's current economic situation, I think renting offers the advantage of not committing to one place and not shelling out a large amount of money all at once. Renting gives the flexibility of moving easily and saves you from depreciation and major maintenance costs. Considering the country’s current economic situation, I think renting offers the advantage of not committing to one place and not shelling out a large amount of money all at once. Renting gives the flexibility of moving easily and saves you from depreciation and major maintenance costs.

]]> By: annej http://www.debtfreeadventure.com/is-it-better-to-buy-or-rent/#comment-9933 annej Fri, 09 Jul 2010 12:58:41 +0000 http://www.debtfreeadventure.com/?p=5403#comment-9933 You haven't considered the entire picture.... credits for mortgage interest on your federal taxes which you don't receive as a renter, homeowners rebates and/or credits on state taxes, which you don't receive as a renter, etc... owning a home is better as a parent for FAFSA reasons, your credit rating is better as a home owner.... I could go on You haven’t considered the entire picture…. credits for mortgage interest on your federal taxes which you don’t receive as a renter, homeowners rebates and/or credits on state taxes, which you don’t receive as a renter, etc… owning a home is better as a parent for FAFSA reasons, your credit rating is better as a home owner….
I could go on

]]> By: Money Funk http://www.debtfreeadventure.com/is-it-better-to-buy-or-rent/#comment-9010 Money Funk Mon, 29 Mar 2010 20:03:08 +0000 http://www.debtfreeadventure.com/?p=5403#comment-9010 Great post, Matt. i was always curious about the rent vs buying debate. As I would assume buying is optimal. However, I see why in certain circumstances it would be better to rent. I still side with buying if the rates are in your favor. Because i think it ties in with a more personal choice, in that you get to redecorate, renovate, make it your home. Granted, if something goes wrong you are responsible for the fixing. With renting, the landlord is responsible. You, as a renter, are tied into rules about remodling, etc... And even if you do remodel, it is not your work to keep. Plus, I have had too many complications with landlords about getting things fixed or updated. I would rather have the upper hand in that. Great post, Matt. i was always curious about the rent vs buying debate. As I would assume buying is optimal. However, I see why in certain circumstances it would be better to rent.

I still side with buying if the rates are in your favor. Because i think it ties in with a more personal choice, in that you get to redecorate, renovate, make it your home. Granted, if something goes wrong you are responsible for the fixing.

With renting, the landlord is responsible. You, as a renter, are tied into rules about remodling, etc… And even if you do remodel, it is not your work to keep. Plus, I have had too many complications with landlords about getting things fixed or updated. I would rather have the upper hand in that.

]]> By: Matt Jabs http://www.debtfreeadventure.com/is-it-better-to-buy-or-rent/#comment-8973 Matt Jabs Fri, 26 Mar 2010 13:50:44 +0000 http://www.debtfreeadventure.com/?p=5403#comment-8973 Hi Mitch, I know how badly you and your significant other must want to get into a house right now, but I would encourage you to AT LEAST save 20%. If you cannot do that, then you should not be buying. Hi Mitch, I know how badly you and your significant other must want to get into a house right now, but I would encourage you to AT LEAST save 20%. If you cannot do that, then you should not be buying.

]]> By: Mitch http://www.debtfreeadventure.com/is-it-better-to-buy-or-rent/#comment-8675 Mitch Mon, 15 Mar 2010 18:16:25 +0000 http://www.debtfreeadventure.com/?p=5403#comment-8675 We are looking right now to buy. Found a 2/2.5 that we love priced at $67k. We currently pay $850/month in rent for 2/2.5. While we don't have much for a down payment, we do qualify for FHA loan. The home purchase would put us in a bigger home (sq ft wise) that is about 18 years newer ('88 or '89 vs '06) with a mortgage payment, PMI, taxes, HOA less than our current rent We are looking right now to buy. Found a 2/2.5 that we love priced at $67k. We currently pay $850/month in rent for 2/2.5. While we don’t have much for a down payment, we do qualify for FHA loan. The home purchase would put us in a bigger home (sq ft wise) that is about 18 years newer (’88 or ’89 vs ’06) with a mortgage payment, PMI, taxes, HOA less than our current rent

]]> By: Latest retirement saving calculator news – Ultimate Blog For All Of You Guys: The top Personal Finance save … http://www.debtfreeadventure.com/is-it-better-to-buy-or-rent/#comment-8546 Latest retirement saving calculator news – Ultimate Blog For All Of You Guys: The top Personal Finance save … Fri, 12 Mar 2010 04:07:13 +0000 http://www.debtfreeadventure.com/?p=5403#comment-8546 [...] Is It Better to Buy or Rent? Use This Calculator to Find Out [...] [...] Is It Better to Buy or Rent? Use This Calculator to Find Out [...]

]]> By: Blah Blah Black Sheep http://www.debtfreeadventure.com/is-it-better-to-buy-or-rent/#comment-8320 Blah Blah Black Sheep Thu, 04 Mar 2010 21:43:22 +0000 http://www.debtfreeadventure.com/?p=5403#comment-8320 My thoughts have always been that a home is a tangible good, and it will depreciate in value regardless of what the market does. Eventually, just like a car, the older a home gets, the more you'll sink into repairs. Things will deteriorate. The neighborhood will get older. The house will get older. Sure, you can sell the house and move to a newer neighborhood, but then you're having to time the market, and could be at the mercy of said market if it's tanking and you desperately want to move. A home is not an "investment", unless by "investment" you mean "peace of mind of having some place to come back to that you own". For the money most folks toss at creditors to borrow the money to buy a home, they could be renting, and then tossing whatever's left over into a mutual fund or investment account that will get far greater returns. Then, when the time comes that they've saved up enough and the housing market is favorable for buying, they can pull the money out of investments and buy a house free-n-clear, without having to borrow money for it, which would inflate the value of the house by however much interest you would have paid. It's actually quite ridiculous how the whole "american dream" has folks essentially getting into debt very early in life so they have to slave away to pay things off before retirement. Student loans, car payments, house payments, credit cards ... people have lost the common sense of living at or below their means, and only buying what they can afford right now, not what they think they can pay off in the future. And yet when I explain this to people, they look at me like deer caught in the headlights and think I'm an idiot. And yet, I'm young, single, have no debt what-so-ever, everything I own is paid off, I rent, I pay for my schooling as I go instead of getting student loans, and since I've had money to toss into the market since it's tanked, I've seen a nice return on my investments as the market's started to pick up. Meanwhile, folks I know own their own homes (and mortgages), have new cars (and car payments), complain when the market tanked because they were too dumb to move their money out before it lost value, they have student loans, they have 3 kids they have to pay for, etc, etc...they have the american dream, are unhappy, and they're trying to tell me that I'm the one who has it all wrong. *sigh* My thoughts have always been that a home is a tangible good, and it will depreciate in value regardless of what the market does. Eventually, just like a car, the older a home gets, the more you’ll sink into repairs. Things will deteriorate. The neighborhood will get older. The house will get older. Sure, you can sell the house and move to a newer neighborhood, but then you’re having to time the market, and could be at the mercy of said market if it’s tanking and you desperately want to move.

A home is not an “investment”, unless by “investment” you mean “peace of mind of having some place to come back to that you own”. For the money most folks toss at creditors to borrow the money to buy a home, they could be renting, and then tossing whatever’s left over into a mutual fund or investment account that will get far greater returns. Then, when the time comes that they’ve saved up enough and the housing market is favorable for buying, they can pull the money out of investments and buy a house free-n-clear, without having to borrow money for it, which would inflate the value of the house by however much interest you would have paid.

It’s actually quite ridiculous how the whole “american dream” has folks essentially getting into debt very early in life so they have to slave away to pay things off before retirement. Student loans, car payments, house payments, credit cards … people have lost the common sense of living at or below their means, and only buying what they can afford right now, not what they think they can pay off in the future.

And yet when I explain this to people, they look at me like deer caught in the headlights and think I’m an idiot. And yet, I’m young, single, have no debt what-so-ever, everything I own is paid off, I rent, I pay for my schooling as I go instead of getting student loans, and since I’ve had money to toss into the market since it’s tanked, I’ve seen a nice return on my investments as the market’s started to pick up. Meanwhile, folks I know own their own homes (and mortgages), have new cars (and car payments), complain when the market tanked because they were too dumb to move their money out before it lost value, they have student loans, they have 3 kids they have to pay for, etc, etc…they have the american dream, are unhappy, and they’re trying to tell me that I’m the one who has it all wrong.

*sigh*

]]> By: Matt Jabs http://www.debtfreeadventure.com/is-it-better-to-buy-or-rent/#comment-8314 Matt Jabs Thu, 04 Mar 2010 16:52:53 +0000 http://www.debtfreeadventure.com/?p=5403#comment-8314 Thank you for shedding light on this specific and important variable Tony! Great job... you should write a guest post for me about this! What do you say? Thank you for shedding light on this specific and important variable Tony! Great job… you should write a guest post for me about this! What do you say?

]]> By: Tony http://www.debtfreeadventure.com/is-it-better-to-buy-or-rent/#comment-8312 Tony Thu, 04 Mar 2010 16:03:25 +0000 http://www.debtfreeadventure.com/?p=5403#comment-8312 Excellent article Matt. Finally somebody shines the light on this subject from a different perspective. One point that you did not discuss was the ability to input your investment return percentaje in the calculator. This is the return on the money you save by renting. That was the key point for me. 4 years ago I came to the decision I would rent instead of buying a place and put all my money to work in different investments. I now have $320K invested and no debt. I feel great. Once I retire I will then buy a humble place where I know I'm going to spend a long time in and pay cash for it. Things have changed in America and not many people realize this, higher property taxes (3% here in Houston), and lower GDP growth will make it very dificult for houses to appreciate considerably in the future. Excellent article Matt. Finally somebody shines the light on this subject from a different perspective. One point that you did not discuss was the ability to input your investment return percentaje in the calculator. This is the return on the money you save by renting. That was the key point for me.

4 years ago I came to the decision I would rent instead of buying a place and put all my money to work in different investments. I now have $320K invested and no debt. I feel great. Once I retire I will then buy a humble place where I know I’m going to spend a long time in and pay cash for it.

Things have changed in America and not many people realize this, higher property taxes (3% here in Houston), and lower GDP growth will make it very dificult for houses to appreciate considerably in the future.

]]> By: » Two Common Mortgage and Housing Mistakes to Avoid http://www.debtfreeadventure.com/is-it-better-to-buy-or-rent/#comment-8310 » Two Common Mortgage and Housing Mistakes to Avoid Thu, 04 Mar 2010 15:41:33 +0000 http://www.debtfreeadventure.com/?p=5403#comment-8310 [...] a home vs. renting you can check out Laura’s view of the buy vs. rent dilemma, as well as my opinion on the same [...] [...] a home vs. renting you can check out Laura’s view of the buy vs. rent dilemma, as well as my opinion on the same [...]

]]> By: Matt Jabs http://www.debtfreeadventure.com/is-it-better-to-buy-or-rent/#comment-8164 Matt Jabs Tue, 02 Mar 2010 19:12:09 +0000 http://www.debtfreeadventure.com/?p=5403#comment-8164 Yeah, home repair costs are commonly brushed aside when people compare renting against homeownership... all the more reason to carefully consider these decisions over long periods of time, so we can make sure. Yeah, home repair costs are commonly brushed aside when people compare renting against homeownership… all the more reason to carefully consider these decisions over long periods of time, so we can make sure.

]]> By: Debt Free Dude http://www.debtfreeadventure.com/is-it-better-to-buy-or-rent/#comment-8163 Debt Free Dude Tue, 02 Mar 2010 19:09:31 +0000 http://www.debtfreeadventure.com/?p=5403#comment-8163 Traditionally buying a house has been seen as a good investment. But traditionally people didn't move as much as they do now. My grandmother lives in the home she and my grandpa bought back in 1945. My parents have lived in one apartment, a house and then one a farm (where they have been for the last 30 years). I have lived in six different places since my wife and I got married. This mobility makes renting look a lot more appealing. Another thing that often gets overlooked: Do you like being a handyman? If you do, there are a lot of little things that won't cost you much in dollars where you can keep your house in good repair. If you have to hire someone for every single thing that needs done, renting may be a better option for you. Traditionally buying a house has been seen as a good investment. But traditionally people didn’t move as much as they do now. My grandmother lives in the home she and my grandpa bought back in 1945.

My parents have lived in one apartment, a house and then one a farm (where they have been for the last 30 years). I have lived in six different places since my wife and I got married. This mobility makes renting look a lot more appealing.

Another thing that often gets overlooked: Do you like being a handyman? If you do, there are a lot of little things that won’t cost you much in dollars where you can keep your house in good repair. If you have to hire someone for every single thing that needs done, renting may be a better option for you.

]]> By: Personal Finance Weekly http://www.debtfreeadventure.com/is-it-better-to-buy-or-rent/#comment-8050 Personal Finance Weekly Fri, 26 Feb 2010 16:16:14 +0000 http://www.debtfreeadventure.com/?p=5403#comment-8050 [...] Free Adventure Is It Better to Buy or Rent? Matt brings a heated discussion that we have also been having with my wife. Buy house now and enjoy [...] [...] Free Adventure Is It Better to Buy or Rent? Matt brings a heated discussion that we have also been having with my wife. Buy house now and enjoy [...]

]]> By: Mvelopes 1 Year Membership Giveaway and Friday Round Up | One Money Design http://www.debtfreeadventure.com/is-it-better-to-buy-or-rent/#comment-8046 Mvelopes 1 Year Membership Giveaway and Friday Round Up | One Money Design Fri, 26 Feb 2010 12:58:20 +0000 http://www.debtfreeadventure.com/?p=5403#comment-8046 [...] Free Adventure: Matt explores the question:  should you buy or rent your home?  What do you think?  Check out the calculator Matt uses and see what’s best for your [...] [...] Free Adventure: Matt explores the question:  should you buy or rent your home?  What do you think?  Check out the calculator Matt uses and see what’s best for your [...]

]]> By: OutOfYourRut’s First Ever Friday Personal Finance Round Up « OutOfYourRut.com http://www.debtfreeadventure.com/is-it-better-to-buy-or-rent/#comment-8034 OutOfYourRut’s First Ever Friday Personal Finance Round Up « OutOfYourRut.com Thu, 25 Feb 2010 23:41:56 +0000 http://www.debtfreeadventure.com/?p=5403#comment-8034 [...] me), but few can do it with the depth and clarity that Matt at ***Debt Free Adventure does in Is It Better to Buy or Rent? Also check out Matt’s Feb. 17 post, One World Currency – New World Order. It’s not for the [...] [...] me), but few can do it with the depth and clarity that Matt at ***Debt Free Adventure does in Is It Better to Buy or Rent? Also check out Matt’s Feb. 17 post, One World Currency – New World Order. It’s not for the [...]

]]> By: Robert Espe http://www.debtfreeadventure.com/is-it-better-to-buy-or-rent/#comment-8033 Robert Espe Thu, 25 Feb 2010 23:35:16 +0000 http://www.debtfreeadventure.com/?p=5403#comment-8033 Interesting to me that even though you would finance after saving 30%, 30% for you is the purchase price of a home for most of us. So in a way, you agree with Matt and I that saving $100-$150k in cash is doable. As for the mortgage interest deduction, It can be described as spending $100 to save $20. It doesn't really save you anything, just keeps you from being taxed on some of the money that never went into your pocket anyway. Interesting to me that even though you would finance after saving 30%, 30% for you is the purchase price of a home for most of us. So in a way, you agree with Matt and I that saving $100-$150k in cash is doable.

As for the mortgage interest deduction, It can be described as spending $100 to save $20. It doesn’t really save you anything, just keeps you from being taxed on some of the money that never went into your pocket anyway.

]]> By: Robert Espe http://www.debtfreeadventure.com/is-it-better-to-buy-or-rent/#comment-8032 Robert Espe Thu, 25 Feb 2010 23:29:31 +0000 http://www.debtfreeadventure.com/?p=5403#comment-8032 Have a look at my article from a couple weeks ago on the "throwing money away" issue. Odds are you will throw away just as much on interest payments for the first several years of the loan. Usually true for about half the duration of the loan. http://www.debtfreeadventure.com/renting-vs-mortgage-and-a-solution-for-mortgage-free-home-ownership/ Have a look at my article from a couple weeks ago on the “throwing money away” issue. Odds are you will throw away just as much on interest payments for the first several years of the loan. Usually true for about half the duration of the loan.

http://www.debtfreeadventure.com/renting-vs-mortgage-and-a-solution-for-mortgage-free-home-ownership/

]]> By: Financial Samurai http://www.debtfreeadventure.com/is-it-better-to-buy-or-rent/#comment-8027 Financial Samurai Thu, 25 Feb 2010 15:26:12 +0000 http://www.debtfreeadventure.com/?p=5403#comment-8027 Saving money before buying a house is definitely a given. I have a 30/30/3 rule, where you should have 30% of the value of the house saved in cash. $500,000 house, have $150,000 in the bank so you can put down $100,000 and have a $50,000 buffer. Since savings is a given, it is not the point of debate for buying and renting. Your tax bracket makes a HUGE different in how you calculate the return from this calculature. If you don't have at least 20% saved up, and you are in the 28% or lower tax bracket, it's probably not worth it. Saving money before buying a house is definitely a given. I have a 30/30/3 rule, where you should have 30% of the value of the house saved in cash. $500,000 house, have $150,000 in the bank so you can put down $100,000 and have a $50,000 buffer.

Since savings is a given, it is not the point of debate for buying and renting. Your tax bracket makes a HUGE different in how you calculate the return from this calculature.

If you don’t have at least 20% saved up, and you are in the 28% or lower tax bracket, it’s probably not worth it.

]]>