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Rent or Buy? Tips for Retired House-Hunters

MAY 18, 2016

Conventional wisdom favors buying a home over renting, but some retirees may find that renting a home is more cost effective than a mortgage.

It is true that purchasing a home is 34.8% cheaper than renting nationally for households with a 30-year fixed-rate mortgage who move every seven years and can afford a 20% down payment, according to a study based on March home values and rents by home-listing website Trulia.com. However, much of those savings comes from the accumulation of equity through long-term homeownership, says Ralph McLaughlin, Trulia’s chief economist. If retirees plan shorter stays, or have no heirs to which to pass that equity, they may actually come out ahead financially by renting, he adds.

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