essy one final draft

Why rent when you can buy and be your own landlord?

In the long term owning a home makes a far better financial sense than renting. The key word here is long term as well as financing with a fixed-rate loan. It does not make any sense for people to buy a home if they have no plans on staying in the same area for at least a few years. It takes a lot of time and preparation to get the dream house, but it can happen. Although the housing market is still volatile, home ownership is a good investment because owning can build equity,over a few years owning a home can be cheaper than renting, and owning a home means the home can eventually be sold for a profit or a bigger house. First to think about is how the equity is built in home ownership.

Home equity is built in a few ways. The amount from the down payment, the monthly mortgage payments and through appreciation. Normally the down payment is on ten to twenty percent of the value but the appreciation is on the full value of the home. The argument can be made that one could put what they would save from the difference on renting as to owning a home and invest it. That would require very disciple financial work and being in a cheap rental unit. If renting a place was over $900 per month start looking for a house. Just remember to start small and do not get in over your head. Bankers and financial planers are the first people to talk to be for looking for that dream house or starter house. Now lets look into the next question, Is owning truly cheaper than renting?

When renting it is in some circumstances cheaper than home ownership, when there is a plan to move out of the area in a few years, or the rent is very low. The real value of home ownership does not come to head till after a few years when the equity and market value has risen on the home in question. Some may still say that renting is the cheaper way because of the other expenses that is paid by the owner of the rental property like taxes, insurance, and maintenance. Truth is most property managers and property owners will pass all of these expenses on to the renter while they build equity in the property. Over the course of the mortgage the payments remain the same. On small homes the cost of owning can be the same as if one was to pay rent. After the mortgage is paid then the only money going out is taxes, insurance, and maintenance. There is also the tax break for home owners. This break is on the interest paid on the mortgage. Lastly how can it be sold for profit?

As stated in the beginning, it is in the long term that being a home owner does the financial benefits take place. "Three out of four people have more equity built up in there home than in other assets in retirement plans, stocks, mutual funds, and savings." In the last few decades property values have increased on par or just above inflation." In the last five years, the median price of homes all across America has increased in value approximately 10% per year."(1) Remember that the equity built is on the whole of the value of the home. So that extra ten percent is put on top of that value. "On average, people who live in the United States move to new homes about every seven years" (2) So what this means is if only ten percent was put down on the house and after seven years there was an increase of ten percent on the home value every year then selling the home would net huge profit. That profit could be used for the down payment on the next home, or getting a bigger house. Now putting it all together.

Even with the volatile hosing market owning a home is the best investment because owning builds equity, after a few years the cost of owning gets cheaper than the cost of renting, and with the increasing property values homes can be sold after some time for a profit or the down payment on a bigger home. Bring all these factors in and It is cheaper to own a home than it is renting on!

(1) (http://www.realestateabc.com/insights/should-I-buy.htm)

(2) Howstuffworks "How buying a house works" by Lee Obringer (http://www.money.howstuffworks.com/house-buying.html)