Usually sitting at the center of the American dream is a desire to own a home. Owning your own home means you can paint the walls whatever color you want, change the flooring to suit your needs, and renovate that kitchen just as you imagined. But if you’re renting, the costs of homeownership can seem daunting. Maybe it’s best to give up on that perfect kitchen.
Before you do, let’s take a look at how the costs of renting stack up with those of buying. You might be surprised at what you find.
Comparing Costs of Buying vs. Renting a Home in Texas in 2018
The simple cost difference between buying or renting a house in the state of Texas is pretty small. Here’s a look at the costs for a home valued at $150,000 with an estimated monthly rent of $1,500.*
Let’s check out the one year difference of renting (including a deposit and renter’s insurance) vs. buying (including fees and average repairs).
- Renting for one year will cost you $18,288 vs. $23,928 to own.
Renting wins by $5,460 over the first year.
- Renting for two years will cost you $37,560 vs. $33,312 to own.
Owning saves you $4,248 over two years.
And the numbers just keep getting better for home ownership. By year five, you would have saved $37,650 on this home by owning instead of renting. And by year 10? How about a savings of over $109,100 dollars?!
Buying a home is definitely the more cost-efficient option in Texas. However, there are advantages beyond your monthly payment. Owning your own home also allows you:
- Freedom to modify the property however you want
- Making a profit when you sell that home because of appreciating value
- Tax benefits from deducting mortgage interest on your taxes for qualifying borrowers
- Ability to lock in your fixed-rate mortgage instead of having rent prices raised on you
So is it better to rent or buy? When you look at the numbers and other benefits, it’s hard to argue against home ownership.
And this is not just true in Texas. Trulia.com has outlined national benefits to buying over renting by examining data from 100 metro areas in the United States.
Based on 2017 data in San Antonio, buying costs 40.2% less than renting. In Houston, that difference is 42.5%!
One Caution of Homeownership
It’s important to remember that homeownership is a commitment. You need to be able to spend years in a property to see the return on your investment. So if you know your stay in a given city will be short, stick with renting. But if you plan to stay a while, buy to save the most money.
Still on the Fence About Renting or Buying?
Austin is growing at a 2.9% rate each year. In fact, 159 people move to the Austin area every day. This means that the surrounding suburban areas of Cedar Park, Leander, Round Rock, and Pflugerville are also booming. If you choose to buy in a suburban area like this, you secure a home for yourself while also making an investment in the future. Texas’ rapid growth means property values are on the rise. And they don’t show any signs of slowing anytime soon.
Our offices are located in many of these growing communities around the state of Texas. We would be happy to help you evaluate the benefits of homeownership. Our experienced loan teams can select a mortgage product that’s right for you and get you started on the path to ownership.
Get started today.