Rent to Own

Many people don’t realize how much of a benefit there is to being a homeowner. But the example below clearly shows just how quickly equity (the difference between the market value and what you owe) on a home can build up, whereas when you pay rent, you will never see that money again!  

If you Rent:

Monthly Rent

Monthly Rent

Yearly Paid Rent

1st Year

$2,500

$30,000

$0

2nd Year

$2,625

$31,500

$0

3rd Year

$2,756

$30,072

$0

4th Year

$2,894

$34,728

$0

5th Year

$3,039

$36,468

$0

Where did your rent ($162,768) go? To your landlord!

If you Own:

End Of:

Monthly Payment*

Value Includes Appreciation**

Mortgage Balance***

Equity****

1st Year

$2,268

$475,000

$475,000

$0

2nd Year

$2,628

$498,750

$466,635

$32,115

3rd Year

$2,628

$523,688

$457,929

$65,759

4th Year

$2,628

$549,872

$448,869

$101,003

5th Year

$2,628

$577,365

$429,626

$147,739

After five years, you may realize $147,739 in equity if you purchase (plus received possible tax benefits), but when you rent, you will have poured $162,768 into your landlord’s pocket!

* Includes Principal and Interest only on a 4.00% mortgage with a purchase price of $475,000 

** Appreciation rate estimated at 5% annually on a $475,000 home 

***   Based on the declining principal balance 

****  Difference between what you owe and the possible market value of the example home based on 5% annual appreciation.