Uncategorized May 23, 2011

Mortgage vs Rent- The nuts and bolts

That rent and a mortgage are different? Obviously you did. However, it is easy for investment owners to think that the monthly rent and the monthly mortgage amount are related, but they are not. A mortgage is an agreement with the bank based on the amount of the loan, the buyer’s credit history and the sales value of the property at the time of the loan. None of these are factors when determining rent; rent is entirely driven by local market competition and conditions – basically supply and demand. A mortgage and rent also buy different things – a mortgage pays for an investment, while rent pays for a roof for a specific period of time with none of the financial or tax benefits of home ownership.