Why Renting is Almost the Same as Buying in Today’s Market

If you have ever heard from disturbed and perturbed homeowners who commonly lament that they feel like they are merely renting a home from the bank as opposed to their wiser friends who choose to truly rent a home and not be subjected to the ins and the outs of home purchase, there are ample reasons as to why. First and foremost, a home is supposed to be an investment, however when owners are dwarfed by costly repairs, dropping home values and banks that seemingly don’t really care about them, many times it is similar to renting a home, which would, in the end, cost a lot less and have no apparent contractual long term strings attached.

How the Numbers Stack up
Here is a good way to compare the costs. Let’s say you bought a home at a decent average interest rate of say eight percent on a thirty year fixed note—in the end you pay roughly a hundred or so grand in interest on a four hundred thousand dollar home. So you are paying the bank a hundred grand for the luxury of living in a home, a home that is supposed to net you profits in the end. However, when you compare the millions of homes that have lost much of their value over the past decade, you are paying well over the purchase price to simply hold a deed that states you own the home. If you default to the bank, they will take your home and leave you destitute in the streets. Most often the home sells for a lot less at foreclosure, so any equity, if any, that you built up over the years vanishes. Wow that sounds nice doesn’t it?

Renting from the Bank or Renting from a Landlord
The bank can ruin your credit and tie you up in court and really make your life a living hell. A landlord can merely evict you and try to collect past rents due via a court judgment that rarely affects your overall credit rating. And you can settle for pennies on the dollar to wipe away most judgments. Get stuck with a foreclosure on your credit report and good luck ever getting a loan for anything, ever again!

Cost of Homeownership Versus Renting
Homeownership can be very costly when you add up all of the dollars. You are responsible for all repairs, home taxes, and insurance, home owner association fees and so on. This is tacked on to your existing mortgage payment. Whereas a renter merely pays the rent, and is not subjected to further misery.

Why more Americans are Renting Homes
More Americans are renting homes because they don’t see the difference between that and buying one. What used to be an American dream is now plagued by misery and financial uncertainty that has made it, in recent years, more lucrative to rent a home over purchasing a home. Over the next few decades, if the housing market is able to fully recovery, then once again this fair vetted dream of homeownership can become a reality. Until such times, pay the rent on time and you will be all right.