Is Renting A Good Idea?


Today there are more home renters than ever before. Many current renters are former owners who faced the foreclosure of their home or experienced other financial problems.

These renters are now living in what they consider to be temporary housing, waiting for the opportunity to again purchase a home of their own. Some renters are planning to remain in a rental unit indefinitely, while most are eager to move into a newly purchased home.

It might surprise you to learn that the amount of money a renter spends on rent can be about the same as or more than the amount a homeowner spends on a mortgage. With the tax benefit for homeowners, the savings can be significant. This was revealed in a recent report from Ginnie Mae.

A renter must expect annual increases of about 5 percent in monthly rent, on average. In a few years this can bring the rent up to or beyond the level of principle and interest payments on a fixed-rate mortgage, especially in today's market where interest rates are historically low.

One big advantage of owning a home, in addition to pride of ownership, is the ongoing tax advantages. This includes the deductibility of interest payments and property taxes. Also, with each payment the balance of the amount owed declines, thus building equity in the property for the owners. Many families consider ownership of their home as their best saving program. In time their equity can grow their capital worth to the point where they can acquire a more expensive step-up home.

A lesser known benefit of home ownership relates to its effect on children. Several studies have pointed to the positive impact of ownership on the lives of kids in the household. They feel more secure and tend to be more self-confident while living in a home owned by their family as opposed to living in a rental residence.