I had a discussion with a friend today who has, as a personal interest, followed the economy and the causes of our recent troubles quite passionately. As a result, conversations with said friend tend to be quite illuminating, both in the predictions that ensue as well as the general fact-given information that is generated. Among the many interesting topics, today generated a particularly noteworthy fact: It may be cheaper to rent and buy a home than to borrow and buy a home.

The entire concept almost seems counter-intuitive at first, especially when it is phrased as many experts have been phrasing it: “It’s cheaper to rent than to own”. Obviously, if you’re renting a property, then you’re not working towards an ultimate goal of buying it, so then, you might ask, “how am I working to buy a home when I’m renting?”. The answer lies within the savings you get from renting as opposed to making monthly mortgage payments.

With the money that you save from paying rent as opposed to keeping up with a mortgage, you can instead save up and put that money forward to buy a house in full later. Essentially, if the interest on the home that you’re purchasing, plus taxes, plus general home maintenance costs exceeds the amount you would save in paying monthly rental payments instead of monthly mortgage payments, then it’s better to rent than to buy.

Of course, all of this is contingent on your saving the difference and putting that towards buying a new home. Furthermore, you can make better use of the saved funds if you invest them in slow, stable investment opportunities (such as bonds). You won’t have the cash to purchase a house for a number of years, so you can afford to invest much of it in slow, solid funds that will increase their value over time. You can also try riskier investments as well for a faster attempt at getting your own home, but the risk could end up biting back and leave you with little to show for all of your hard-work saving.

Many people view renting as inferior since you don’t “own” the home. However, some of the mortgage bills that people are paying are absolutely stifling and, in the end, they’ll end up paying more for the home than it’s actually worth! Many landlords are actually quite lenient in what you can and can’t do, especially with homes as opposed to apartments. And as long as you’re a good, honest tenant you can live on rented property just as well as property that you “own”. All the while, you’ll be saving up that extra cast to more cheaply and more quickly afford and purchase that home of your dreams, and it will be all yours right at the start!