Should You Rent or Buy

The thought of buying a home is exciting but owning isn't for everyone. Some people would rather leave the yard work to the landlord, and like being mobile or close to vital downtown areas where work and play are a short walk away.

It is a big decision so here's some information to help you determine whether buying or renting works better for your immediate needs and your pocketbook.

When it comes to buying:

  • When you own, you can deduct interest and the local property tax portions of each mortgage payment you make from Federal taxes. (Note, however, there's a maximum loan amount of $1 million--$500,000 if married but filing separately--that qualifies for an interest deduction.) If you're in the 28% tax bracket, the government underwrites $292 for every $1,000 of deductible interest and taxes.
  • When you own, each payment builds equity, or the financial stake you have in your house, and increase your net worth. As your house's value appreciates through improvements you've made or changes in the market, your equity grows.

When it comes to renting:

  • With renting, lower monthly payments will help you sock away money for the one-two financial punch of a down payment--which typically runs between 5% and 20% of the house's price--and closing costs--which typically run between 3% and 6% of the house's price.
  • With renting, if you know your family is going to grow, it may be better to continue renting until you save up for a house you won't outgrow before you recoup your expenses, which typically takes five to seven years.
  • Renting may be your best bet if your job could require you to move in a couple years.
    As you weigh renting vs. buying and face what may be the biggest financial decision of your life, give equal consideration to your personal preferences as well as the dollars and cents. For information about our low mortgage rates and savings accounts to help you save for that down payment or other goals, contact us today.

SWS Federal Credit Union
1700 Pacheco Blvd, Martinez, CA 94553

Routing & Transit Number: 321173218