8/07/2006

Rent vs. Buy: Buying Is Better

According to the National Association of Reators, the Federal Reserve Board estimates that homeowners have a net worth nearly 36 times more than that of renters. Over the past 10 years, the cost of rental housing in the United States has increased an average of 3 percent per year; average rents are projected to rise 4.1 percent this year alone. With a 3 percent annual increase, a current rental payment of $1,000 per month would increase every year and amount to $137,567 after 10 years, with no wealth accumulation.

In contrast, a $210,000 home purchased today with a downpayment of $10,000 and a 30-year fixed rate mortgage at 6.5 percent would cost a steady $1,100 per month and yield a net worth of $138,521 after 10 years, assuming an historic 4.5 percent annual appreciation rate.

2 comments:

Anonymous said...

Where are you finding a $210,000 home in the Long Beach area?

jpillow24 said...

If you're looking for a house it is really better to buy than rent. When you buy you are investing on something that could really be yours and you see the value of your money after years of paying. Renting is just like spending money on nothing. You spend thousands of dollars every month yet you will not see any property after a couple of years.

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