To rent, to own, what are the advantages?

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Rent occupies a significant portion of college debt. Whether out of your own pocket or the deeper ones of your parents, the amount of total college expenses consumed by room and board is substantial — substantial to the point that it might be a better option for some to avoid renting and go straight to buying.

According to Housing and Dining Services at K-State, the average rate for dorms and a 20-meal plan for the past four years was $6,299 per year. This is $661 less than the national four-year public average, which is $6,960, according to a report from collegeboard.com.

In a survey of 11 randomly selected off-campus students, the average rent was $315 per person with approximately $75-100 per month, per person for utilities. These utilities included electric, gas, water and sewage, trash removal and cable/Internet.

Grocery bills can vary widely from person to person depending on habits and appetite, but according to most studies on sites like chowhounds.com, they average between $150-$250 per month.

These numbers, added to our average rent, give us a total of approximately $7,230 per year for the off-campus renter. Now, this doesn’t represent everyone who rents off campus, and it might include extraneous expenses in the food budget, like eating out and going to bars which dorm residents may also spend on.

The first key flaw in comparing the lives of the two students and the prices they pay is the duration of time they stay in residence. Students living off-campus typically rent for 12 months at a time while most dorm residents stay for just nine months. So, this comparison would be better suited if we assumed the off-campus individual subleases over the summer and only pays for nine months. Then the rental cost would be $5,422.50, as opposed to $6,299 at the dorms.

These are both staggering numbers for a college student. Assuming you attend K-State, your tuition in some cases will be less than living expenses. It appears that, as well as investing in an education, it would be quite smart to invest in this housing market also.
Manhattan is not a cheap place to live. With the average home price listing for $203,266 according to Trulia.com, thinking about purchasing can be a daunting task. However, by using a qualified real estate agent and doing your own research, you may find the answers aren’t as bad as they appear.

First-time home buyers have a plethora of opportunities awaiting them in the housing market. From discounted loans to tax credits, the government and financial institutions alike work to ease the frustration and difficulty of acquiring a first home.

According to Ginniemae.gov, by calculating current rental prices and future plans, we can actually calculate what we should be logically doing. In accordance with our average student paying $315 in rent, and using some of the averages from around the country, we can gain a perspective into buying versus renting.

The average mortgage rate, or property loan rate, for a 30-year fixed-rate mortgage is 5.21 percent, according to Freddie Mac. With first-time home buyers being able to lock in a low down payment generally between 5-10 percent and including appreciation, property taxes and the number of years you plan to stay in the home, their calculator tools allow you to estimate the true difference between renting and buying.

Looking at Trulia.com, it appears that with the current market in Manhattan for one- to two-bedroom houses, a suitable listing price seems to fall around $85,000. Using the Ginniemae.gov calculator for buying versus renting and plugging in our averages, we get a staggering answer.

The average cost, given property appreciation of 2 percent, for renting 10 years, would be $351 per month for that same renter.

But, given a chance to purchase an $85,000 property, assuming property tax, a 5-percent down payment for first-time home buyers, the average 5.21 percent interest rate and the same 10-year period gives some fairly interesting estimates.

The average monthly cost for this mortgage owner would be $222 as opposed to $351, giving a 10-year savings to the buyer of $15,378. Also, the appreciated value of the bought home is $104,833, according to ginniemae.gov.

Granted, there is still a large mortgage on your hands and with a small down payment, you will probably have to carry an additional monthly premium of around $60 per month, according to most mortgage lenders on mortgageqna.com. You will, however, own your home and you have built almost $20,000 by investing for 10 years. This $20,000 could represent the amount you had to borrow for school and as such, could be a great way to cover costs down the road.

While buying a home is not for the average college student, with the right set of circumstances, it could prove to be a very smart move. A number of students planning to stay at the university or attend graduate school would be in such a long-term position that financing for the future move would be a very good investment. There are also those with parents who could help them secure such a property and use some of the money to help finance the college they are paying for.

Whether or not buying seems like an option for you, the advice, calculators and tools are available all over the Web and in realty offices alike. Checking into your options before spending $25,000 to stay at college is always a good idea.

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