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The old "rent vs buy" debate for housing. Are first time home buyers really paying less than renters? Big picture answer: yes. Owning a home is better than renting. Many factors go into the equation, but overall it's better for you to buy a house than it is to pay a landlord's mortgage. Keep in mind: investments are not overnight money-makers. Patience is the key when the market is down. Anyone who bought a house 5 years ago has watched their values drop each year. However, the housing market shows signs of recovery according to most experts. In a few years we expect to see values return and continue to climb.
A rent vs buy calculator from the New York Times helps paint the picture. With median numbers for rent and home prices, you can see that staying in a home for 6 years will save about $1,000 dollars a year. And it just gets better the longer you own. The rent vs buy calculator is pretty cool and can take into account quite a few factors. Of course, property taxes and insurance rates will differ from city to city but you get the idea.
Also consider that renting almost always includes yearly increases, while your house payment will not go up (unless your taxes go up or you're in an adjustable rate mortgage). So while a landlord can raise rent at any time, a mortgage payment will generally stay the same. You can also add equity to a house with home improvements, but there's virtually nothing you can do to a rental to make it your own. Any improvements the landlord may let you make only helps the landlord.
Overall, buying is definitely better than renting. First time home buyers will pay less than renters in the big picture. Download "The Essential Guide to Buying Your First Home" at the button below to learn more about what it takes to buy that first home. The free guide is about a dozen pages and will help get you on the track to ditch the apartment and get your first home.
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