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When
should you consider buying instead of renting? |
You
would like the satisfaction of owning a home and the freedom from
paying rent!
In a survey done by the National Association of Realtors of 6,000
homeowners and 2,000 renters - perhaps the largest ever of attitudes
toward home ownership - showed that 76% of owners and 66% of renters
considered pride of ownership an important reason for buying. |
You
would like to utilize the “savings plan” nature owning
a home allows.
Home ownership always has and continues to comprise the single largest
source of savings for American households. Homeowners build equity
and can borrow against it. |
You
are going to be able to rent out part of the home to help you make
your payments while you build up equity!
In some cases, either because you are purchasing a multiple family
home or perhaps are in a university town, you can rent our part of
the home to help make the payments, while you create equity! This
works particularly well if there are multiple family members who will
likely be able to live in the house for a number of years, or if you
are interested in keeping a rental property when you are ready to
move on after school. We are happy to help you decide if this will
be a wise choice for you! |
You
are ready to settle down and know that you will be in a community
for at least 3 years or are willing to own the home for at least 3
years.
It typically takes about 3 years of ownership to be able to cover
the costs of purchasing and selling a home. In some cases you can
recover those costs more quickly, but this is probably a good rule
of thumb. If you are not going to be in a community for at least 3
years, it may be less expensive for you to rent! More than 6 in 10
renters said "settling down" was an important reason to
buy. |
You
have saved enough money for a down payment.
There are many different loan programs and kinds of financing, each
has different requirements. Generally speaking, to qualify for conventional
loans, housing expenses should not exceed 26% to 28% of your gross
monthly income. For FHA loans, the ratio is 29% of gross monthly income.
Monthly housing costs include the mortgage principal, interest, taxes
and insurance, often abbreviated PITI. For example, if your annual
income is $30,000, your gross monthly income is $2,500, times 28%
= $700. So you would probably qualify for a conventional home loan
that requires monthly payments of $700. |
You
would like to make an investment in your future.
76% of owners and 69% of renters said the investment aspect of ownership
was important. Almost equal portions of owners and renters - close
to 7 in 10 said a dislike of paying rent was an important reason to
buy. There is no doubt that when you rent a home or apartment, you
don’t need to worry about maintenance, but when you think about
the fact that when you rent you do not build up any equity, you don’t
receive any tax benefits and you don’t have any real protection
against rent increases home ownership seems like a great investment.
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You
would like to experience the long-term appreciation typical of the
housing market.
People consider home ownership a good investment because they view
it as a long-term venture. Historically, home prices have risen at
relatively steady rates. The national rates for home appreciation
in the Top 60 markets according to Homestore.com are 8.6% in one year,
7.4% over 3 years, 6.1% over 5 years and 4.3% over 10 years! |
You
would like to take advantage of tax savings.
Property taxes and qualified home interest are deductible on schedule
A, for itemized deductions. |
You
would like to experience the freedom of decorating, remodeling, gardening,
etc.
Though at times home maintenance is a chore, being able to remodel
and fix up and home and yard can be very rewarding and en excellent
hobby that will probably earn you money in the long run!
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You
are ready to make some sacrifices because you believe it will be worth
it!
Almost 7 in 10 renters in the NAR home ownership survey said they
planned to buy a home in the future. More than three-quarters of these
people said they were willing to sacrifice to do that.
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A quick
look at how much you will spend in rent over 10 years!
(A projected cost of living adjustment has
been added.)
| |
$700 per mo. for rent today |
$800 per mo. for rent today |
$900 per mo. for rent today |
$1,000 per mo. for rent today |
$1,100 per mo. for rent today |
$1,200 per mo. for rent today |
$1,300 per mo. for rent today |
| |
You'll pay |
You'll pay |
You'll pay |
You'll pay |
You'll pay |
You'll pay |
You'll pay |
| This Year |
$8,400 |
$9,600 |
$10,800 |
$12,000 |
$13,000 |
$14,000 |
$15,600 |
| Next Year |
$8,904 |
$10,176 |
$11,448 |
$12,720 |
$13,992 |
$15,264 |
$16,536 |
| 3rd Year |
$9,438 |
$10,787 |
$12,134 |
$13,483 |
$14,831 |
$16,179 |
$17,528 |
| 4th Year |
$10,005 |
$11,434 |
$12,862 |
$14,292 |
$15,721 |
$17,150 |
$18,579 |
| 5th Year |
$10,605 |
$12,120 |
$13,634 |
$15,149 |
$16,664 |
$18,179 |
$19,694 |
| 6th Year |
$11,241 |
$12,847 |
$14,452 |
$16,058 |
$17,664 |
$19,270 |
$20,876 |
| 7th Year |
$11,916 |
$13,618 |
$15,319 |
$17,022 |
$18,724 |
$20,426 |
$22,128 |
| |
|
|
|
|
|
|
|
| 8th Year |
$12,630 |
$14,435 |
$16,238 |
$18,043 |
$19,847 |
$21,652 |
$23,456 |
| 9th Year |
$13,388 |
$15,301 |
$17,212 |
$19,126 |
$21,038 |
$22,951 |
$24,864 |
| 10th Year |
$14,192 |
$16,219 |
$18,245 |
$20,273 |
$22,301 |
$24,328 |
$26,355 |
| Total |
$110,719 |
$126,537 |
$142,344 |
$158,166 |
$173,982 |
$189,779 |
$205,616 |
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| Information dealing with purchasing
a home is managed by The EXODUS Network. The EXODUS Network connects
home buyers, sellers and REALTORS® anywhere in the USA and Canada. |
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