As this year ends, the Christmas Season is starting to hit full stride and plans are made for time with family and friends. Visiting various home over the holidays has made folks wonder what is better, renting or buying. Of course the first point is that with renting you are paying someone else's mortgage for them. Also as you move from rental property to rental property you pick up and go taking your furniture and belongings only. With purchasing you sell and take money along with your furniture and belongings. The chart below shows how purchasing a home can lead to financial gain in the long run.
Over 25 years you can pay out $213,000.00 if your rent stays at $710.00 per month for the entire period. Of course it will rise over the years to cover inflation and capital costs for the owner. In the same time period a mortgage of $150,000.00 is paid off at the same $710.00 per month and you will pay the same $213,000.00. The home equity will likely be more than the home purchase price and when sold, you pocket the post sale money tax free. In one scenario you pay, move and continue to pay, in the other you pay, sell and move, pocket money and improve your overall financial picture.
At the start of moving out of your parents home, purchasing may not be your best option or even a choice but with proper planning you can purchase a home and build your financial equity for your future and not for someone else. Meet with a financial planner at your bank or with a mortgage broker and start planning today to improve your choices in the future.