ownership. The purchase of a
home requires a cash investment
and taking on debt. Naturally
you must have saved enough cash,
be able to make future payments,
and also have enough time and
resources to maintain your home.
The cash investment is applied
toward your down payment,
closing costs, and prepaid
items. Some of these items are
not easily recouped if you
should sell the home you buy in
the short term. Buyers need to
consider how long they will own
the property before selling. If
you intend to occupy the
property for a short period of
time, then the financial
benefits of owning the property
In financially analyzing the rent vs. buy decision, you should compare your current rent, future increases, and the renters insurance that you are now paying to the monthly house payment, future appreciation, maintenance and capital gain when you sell. The house payment normally includes your principal repayment of the mortgage, the interest owed on the mortgage, the property taxes, and property insurance. (This is called your PITI, which stands for principal, interest, taxes and insurance.) With time, your property should appreciate or increase in value.*
The rent you pay a landlord is never recouped and none of the rent is tax deductible. When you buy a home, the yearly property taxes, interest, and some of the closing costs are tax deductible.
*Property appreciation is dependent on many market factors. It cannot be accurately predicted because it is a future event. Your sales professional can give you past sales prices of properties in a given area but cannot promise you any specific increase in value.