Skip to Content Skip to Sitemap
Tax Statements are now available! All Members can now retrieve their 2018 tax statements in Online Banking by selecting the "All Services" menu and clicking on "Statements" and in Mobile Banking by selecting "Statements/eMessenger." Learn more about your tax statement here.
Articles

To Buy vs. Rent Your Home

Home ownership can bring a lot of pride. When you own the home, it is yours to renovate, paint, decorate, landscape (etc.) as you choose. However, home ownership also means when something is broken, you have to fix it or pay someone to fix it. Whereas, with renting, you have less leeway in making home improvements/changes, but you can leave the responsibility for repairs to your landlord or apartment manager.

When a person lives and works in a major city, it can sometimes limit the affordability of owning a home and renting may be the best option for his/her budget.

When considering the upfront cost of renting versus buying, renting is typically less expensive. The upfront cost for renting usually consists of one or two months rent, typically referred to as a security deposit. Then you can expect your monthly housing cost to be stable except for utilities and extras such as cable or satellite TV if they are not included with rent. On the other hand, when buying a home, closing costs on a mortgage are typically 3% of the purchase price and can go higher depending on the size of your down payment. That’s $6,000+ on a $200,000 home.

A major difference in buying versus renting is that when one wants to move, the house will (most likely) have value. The apartment will definitely not have any value. Of course, the house may have to be sold before moving to a new home; unless one decides to rent the house to someone else. Leaving a rental home requires nothing more than a notice to the landlord.ne can move to the next place leaving all the rent paid to the landlord behind.

Here are some hypothetical comparisons of costs assuming a $1,500 rent payment versus a $1,500 mortgage payment.

Rent $1,500 a month Buy $200,000 No increase in Value
Deposit 2 X $1,500 3,000 Down Payment 10,000
Security 1,500 Closing Costs 6,000
5 Yrs Rent 90,000 5 Yrs Payments 90,000
Repairs 0 Repairs 5,000
Balance on Lease 0 Balance on Mortgage 174,163
Value of Apartment 0 Value of House 200,000
Residual Value 0 Residual Value 25,873
Rent $1,500 a month Buy $200,000 w 1% increase /Yr in Value
Deposit 2 X $1,500 3,000 Down Payment 10,000
Security 1,500 Closing Costs 6,000
5 Yrs Rent 90,000 5 Yrs Payments 90,000
Repairs 0 Repairs 5,000
Balance on Lease 0 Balance on Mortgage 174,163
Value of Apartment 0 Value of House 208,120
Residual Value 0 Residual Value 33,957
Rent $1,500 a month Buy $200,000 w 2% increase /Yr in Value
Deposit 2 X $1,500 3,000 Down Payment 10,000
Security 1,500 Closing Costs 6,000
5 Yrs Rent 90,000 5 Yrs Payments 90,000
Repairs 0 Repairs 5,000
Balance on Lease 0 Balance on Mortgage 174,163
Value of Apartment 0 Value of House 216,486
Residual Value 0 Residual Value 42,323

As you can see from the chart, buying a home you can afford and plan to live in for at least a few years is most likely the best option. However, renting is also a viable alternative in certain situations. Remember to consider all of your options in your housing decision. 

Events

Event Icon

BALANCE Webinar: YOUR CREDIT SCORE on Feb 21

Learn More
Event Icon

Palm Beach Gardens Branch History Celebration Day on Feb 26

Learn More
Event Icon

Live Homebuyer Webinar on Feb 26

Learn More
Scroll to Top