This Web page compares "buying versus renting" options in Hawaii

Should you rent or should you buy your home? It takes more than looking at your mortgage payment to answer this question. There are many advantages to buying a home versus renting one. Your income, savings, and monthly expenses play an important role in determining how large a mortgage you can afford. In many cases, the amount of money a renter spends on rent can be about the same as or less than the amount a homeowner spends on a mortgage. With the tax benefit for homeowners, the savings can be significant.

Links and Info

Before renting consider following

Hurry Up  - Low interest rates mean homes are on sale NOW!

THE RENT YOU PAY  ADDS UP TO  A SIZABLE SUM. FOR A CLEARER PICTURE OF HOW LARGE THAT SUM CAN BE CONSIDER THE FOLLOWING:

FIRST, consider the lost return on your investment. Real estate that you purchase may appreciate over time, but rental payments will not. Calculate what your earnings could be if you invested your monthly rent. If your rent were over $800 per month and you invested that amount each month for ten years and receive a 5% return on your investment you would earn $28,225.

SECOND, consider the amount of rent that you would pay over a ten year period

  $28,225     lost return on investment, PLUS

$96,000     rent paid over ten years at $800 a month

Total:     $124,225    cost of renting versus investing $800 every month at a 5% for ten years

FINALLY, consider that this example does not take into account the fact that rents typically increase on an annual basis. To get an idea of the cost of renting over 10, 15, 20, 25 or 30 years, locate your monthly rental payment on the table below. This table assumes a fixed rental rate and assumes that you could receive a 5% return if your money were invested instead of paid as rent). This is the amount that could be used to build equity in your own home.

If a Buyer waits, and interest rate goes up only 1%, that Buyer will lose $50,00 to $70,000, or even more, in BUYING POWER - instantly! Check it out below:

Should I rent or buy?

Should you rent or should you buy your home? It takes more than looking at your mortgage payment to answer this question. This calculator helps you weed through the fees, taxes, and monthly payments to help you make a decision between these two options. This report is based on the original purchase price, fees and taxes payable at that time. Insurance and tax costs can fluctuate from year to year. Click the "View Report" button for a detailed look at the results.  Go to Rent versus Buy Calculator.

Monthly Expenses: Buying

Your rental company or your landlord takes part of your rent payment to cover certain housing expenses. When you decide to purchase a home, you accept responsibility for paying for these expenses (listed below). They are additional costs to your monthly mortgage payment and should be included in your budget estimates:

Buy versus Rent Comparison (Source: http://www.ginniemae.gov)

The chart below shows a cost comparison for a renter and a homeowner over a seven year period.

• The renter starts out paying $800 per month with annual increases of 5%
• The homeowner purchases a home for $110,000 and pays a monthly mortgage of $1,000
• After 6 years, the homeowner's payment is lower than the renter's monthly payment
• With the tax savings of homeownership, the homeowner's payment is less than the rental payment after 3 years

• Property Taxes and Special Assessments
• Home/Hazard Insurance
• Utilities
• Maintenance  Fee
• Home Owner Association Fee: Doesn't apply to all purchases. It pays for trash and snow removal and maintenance of common grounds if applicable.
• Membership Fee: It may pay for recreational facilities and other services (cable TV).

Rent-to-Own Deals: Smart Questions to Ask...

Buy versus Rent Decision

House Rules: How to Decide If It's Time to Own Rather Than Rent

For Sellers:

By Suze Orman

Who will tend to the property and pay for routine maintenance?

Homeownership is the greatest AMERICAN DREAM, is it not? But listen up, my friends: If you do not have a clue what it really costs to own a home, how much of a house you can truly afford, and if you are just plain capable of owning a home, I am here to tell you that your dream will most likely turn into your greatest financial nightmare.

Not that any of those issues has scared off anyone from diving into homeownership recently. Did you know that the percentage of U.S. households that now own, rather than rent, is at an all-time high? We have super-low interest rates to thank for that.

So I can imagine that those of you who are still renting might be mentally kicking yourself right about now. I am willing to bet all you can think about is how much money you would have made if you had already purchased a home. I have to tell you that sort of thinking sounds dangerously like the investors in 2000 who thought they were losers if they hadn't jumped on the technology stock craze. And we all know how that story ended.

Feeding the housing craze right now is the panic over higher interest rates. With the rumor that rates have bottomed out and will be heading higher in the next few months, there is this rush to "get into" a house before rates rise. But before you rush to beat a rate increase, you need to understand the true cost of buying versus owning. If you can't afford the true cost of homeownership - no matter how low rates are - you better not make the purchase.

Let me show you how to make an informed decision on whether you can truly afford to buy a home or not.

Who pays for major repairs?

What are the costs of setting up and managing an escrow account for the portion of rent allotted to the down payment?

Buy versus Rent Comparison Chart

Will you manage the property yourself, or hire an agent?

What if the renters change their minds? Who keeps the money in the escrow account?

If the buyers change their minds, what will be required to put the property back on the market?

For Buyers:

How much of the rent is going to the down payment?

How locked in are you if you change your mind?

What will it cost you to get out of the deal?

The True Cost of Home Ownership

The Down Payment: Don't Fall for the Zero Down Trap

How long will it take to accumulate enough of a down payment that you are likely to qualify for a mortgage?

I was once on a national TV talk show to help people determine if they could afford the house they wanted to buy. A woman on the show told us she had spent the past two years hunting for her dream house, which was  

in the $800,000 price range. My first question for her was how much money she had for the down payment. I was dumbfounded when she told me she didn't have any money saved up. She went on to tell all of us that her real estate agent said that was just fine, since plenty of lenders offered "zero down" mortgages. more...

Article also contains:

• Rent is not a Mortgage Payment
• The Tax Break is NOT a Reason to Buy

How to Tell if You Can Really Afford to Buy

Even if you take the time to calculate the true monthly cost of owning your first home, I would suggest that you put those numbers to a test. For you see, looking at the figures on paper and actually having to write those figures on a check are two different issues. So I want you to commit to the following exercise for six months before you actually start even looking for a home: more...

An Appreciation for Ownership

Now that I have walked you through all the issues to consider, I want to put everything in perspective: homeownership is a great achievement and a terrific investment. My message is simply to make sure you can afford it before you take the plunge. Once you determine you have the ability to cover all your housing costs, I say to go for it. more...

Conclusion: For most people buying a home will result in their largest monthly bill (by far), and because they believe that it will bring them wealth or that they are “throwing away their money” if they rent, they often take on a much larger home debt than a prudent budget would allow. It is a real shame when people are driven to get into the housing market because of misplaced notions of imagined financial benefits. Of course, everyone’s circumstances are different, and for some (particularly those that live away from the coasts) the numbers may actually work out in favor of buying.

All information above is provided for information purposes only. A number of factors should be considered prior to purchasing a home. If you have questions, you should consult your financial adviser.

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