Ramit SethiRamit Sethi: The No-BS Guide to Living a Rich Life

Calculating Renting vs. Buying

22 Jun 2024 · 1 min

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Ramit Sethi breaks down the monthly cost of owning versus renting a home. With a 20% down payment and 7% mortgage rate, ownership costs $10,624/month compared to $5,400/month rent, plus hidden costs like maintenance and closing fees that tip the scales toward renting.

Questions this video answers

20%

$10,624 per month

$5,400 per month; rented in January of this year

Maintenance and closing costs

Chapters

If you put 20% down at the current average interest rate for mortgages of 7%, you'd pay about $10,624 a month on your mortgage alone. If you were to rent this same unit, it would cost you $5,400 a month, which is exactly what it rented for in January of this year. That's about half of what it would cost you per month to own. And that's not even factoring in what I call phantom costs of ownership, things like maintenance or closing costs. That would make renting an even better financial decision.