14.4 Where Should You Live?

Today We Will: Find the amount of equity in a home that was purchased. Compare advantages of owning a home versus renting.

14.4

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Where Should you live?

Renting vs Buying a House

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Should you choose to buy your home instead of renting, you would have the advantage of building equity. Equity is the portion of a house that you own. To find equity, take the difference of what you owe and what its worth.

If you purchase a house for $150,000 and in five years it is valued at $200,000, how much equity do you have in the house?

Equity

Essential Resources: Water Sewer Garbage Electricity Gas

Resources that are nice to have but not essential: Internet Phone Gym/Pool Television

Utilities

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More Costs to Consider:

Cheaper!

Pay $650 plus the cost for utilities which is about $175 per month.

Pay $800 for rent with utilities included.

Which is the most cost-effective option per month?

Cheaper!

Pay $550 plus the cost for utilities which is about $150 per month.

Pay $750 for rent with utilities included.

Now compare these scenarios... Which is the most cost-effective option per month?

You are thinking about renting a home. Your monthly rent will be $700, and your renter's insurance will be $1,200 per year. You plan to pay both expenses at the same time each month. What is the adjusted monthly cost for renting this home?

In some cases, you will have a monthly cost and an annual fee to consider when comparing costs!

You wish to purchase a home and found the following expenses: The monthly mortgage payment is $1,009.38. The annual homeowner's insurance is $387.56. The monthly utilities are $850.75. What is your monthly cost if you purchase this home?

Adjusted Monthly Costs

You are considering whether to buy a house for $219,900 or rent one in the very same neighborhood for $950/month.

Rent or Buy Calculator

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