Ingrid B. Quinn

NMLS ID #211652 Arizona, Loan Consultant


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Renting Vs. Owning a Home

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Many people today are debating whether to purchase or continue to rent a home. You might be surprised that in the long run homeownership can be very cost effective. Each payment can be broken down into 4 basic parts. You have your principal & interest payment, property taxes, hazard insurance and in some cases, a mortgage insurance payment.

Committing to a mortgage however does raise some anxiety. It is a long term commitment. People need to be looking at how long they plan on staying in the home. Are you looking for something for the next year or are you looking for a place to settle down in and stay a while?

Currently, with mortgage rates at historic lows and home prices still affordable, mortgage payments are possibly lower than rents. Homeownership also provides tax benefits because a portion of their mortgage payment is deductible on their federal tax returns. This benefit is not applicable to those who rent their home.

If we look at with a 30-year FHA fixed rate mortgage with a 3.75% rate and 3.5% down payment on a $250,000 home we can see the benefits easily. See enclosed graphs.

Many people also say that they simply can not afford the down payment on a home right, but there are many options to purchase a home with no or low money down. Feel free to read my previous post “No Down Payment Home Loans” for more information on the subject. There are good low down payment loan options too. FHA is one of them.

There are a few considerations such as cash to close, income to qualify, credit needed & length of time in home when contemplating purchasing a home. You should never hesitate to consult a professional on the matter. If you have and questions, you can contact me at ingrid.quinn@cobaltmortgage.com.