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Rent versus Own

When does $500 equal $100K?

When does $500 equal $100,000?  Your monthly rental payment goes a long way today if used to purchase a home!

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The payments shown here are rounded up slightly. Factors: Purchase price minus 20% down payment, 30-year fixed rate loan at 4%/4.25% APR using a closing cost factor of 3% of the loan amount. Actual fees can be less. Taxes at 1.25% of value, insurance at $2.90 per $1,000 of loan amount, maintenance at 0.5% of value. Ex. $548,000 home = Monthly Principal and Interest of $2,092.99, taxes of $570.83, insurance of $105.95 and maintenance of $228.33, for a total monthly cost of $2,998.10. This is not an offer to lend nor a good faith estimate. Rates are subject to change at any time. Qualification is based on many factors including but not limited to usable income, debts, credit and the availability of funds to close.

Interest rates are historically low, and home prices are still well below the peak. What does it mean for you? You may be able to leverage what you are paying in rent into far more home than you might have imagined.

Taxes and insurance will vary by area, yet the guide above is a good start. Reach out today, and I’ll be happy to calculate how much home your rental payment could be worth. For more on this topic, check out these posts.

Are You Still Paying the Landlord?

Still Writing Checks to the Landlord? Home loan payments are now often less rent payments!

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If you don’t intend to stay in your home long, need extra mobility or are unsure about your employment prospects, renting probably makes good sense for you. But if you’re planning to stick around, owning may prove to be more rewarding. Here are five good reasons:

Rates are near historic lows, and prices are still well below the past peaks. This unusual combination places the real cost of purchasing a home near a 50-year low.

Buying builds equity. On most mortgage loans, you pay down the principal balance with each payment. This typically starts at about $100 per month for every $100,000 of loan balance and increases each month through the entire life of the loan. To make a fair comparison, be sure to subtract principal paid from a home loan payment vs. the cost of renting the same property.

Home values rise over time. Increases are not guaranteed; however, if we use the last 50 years as a guide, values have typically risen at a pace above inflation.

Homeownership often brings tax benefits. Deductions for home mortgage interest and real estate taxes save many homeowners thousands every year. Others still find taking the standard deduction more beneficial. Always consult your tax pro for advice.

It’s more than just the money. Families become rooted in a neighborhood, school district and community. Homeowners have the freedom to choose paint colors and make modifications. Pets are welcomed. Intangibles like these often formulate the most valuable returns.

Housing is a precious commodity that we all need every day. It’s your choice to rent or to own, yet buying a home for yourself usually beats buying one for your landlord.

If you want to learn more or find out what you might be able to afford, reach out to my team. We’re always happy to help. To read more on this topic, check out these other posts.