Housing: Should You Buy or Rent?
Which option is best for you? 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:
* You can deduct from federal taxes the interest and local property tax portions of each mortgage payment you make. (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.
* With each payment you build 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 in stride.
When it comes to 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.
* 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.
* It 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 Denali Alaskan Federal Credit Union.
Copyright 2007 Credit Union National Association, Inc. Information subject to change without notice. For use with members of a single credit union. All other rights reserved.