What is the real difference between renting and owning? Everyone needs a place to live right? Owning a home is way too expensive, you can’t find a way to save enough money for a down payment, you don’t want something so ‘permanent’ etc. Whatever the excuse may be, owning a home is overall more beneficial to any average person.

Here are the facts, let’s create a scenario for everyone and use Kathy as an example. Kathy is currently renting a townhome in Ocean City, Maryland for $1,500 a month. In 1 year Kathy has paid $18,000 in rent.

 After 5 years of renting Kathy will have spent $90,000. 

That doesn’t include rent fluctuation and any other additional costs that Kathy may run into since she is NOT the owner of the property. Subject changes can happen at any time.

So let me ask you this:

 When you move out does your Landlord give you any equity back? Do you get any tax benefit? 

That $90,000 paid in 5 years has no value or benefit to Kathy at all. In fact she is paying off the home owners mortgage for them. 

Now Kathy is stuck looking for another year round rental in this rental deprived market. When a fraction of that money could have been used as a down payment for Kathy’s first home purchase. 

Now let’s reverse this scenario. Kathy found a beautiful $200,000 home. With an FHA loan, the minimum down payment is 3.5%  ($7,000). Which is similar to first months rent, security deposit, and a pet fee.