Deciding whether it is the right time to buy or rent can be a tough decision. Renters often ask how owning a home and making a mortgage payment compares to renting. Many factors come into play when owning a home such as tax savings and appreciation. The example below is a great comparison showing what your monthly investment would be to own a home after tax savings and appreciation are figured in versus spending the money on renting a home.
Owning your own Home**
3 bedroom / 2-3 baths
Yard & extra storage
1500-2000 finished square feet
2 car attached garage
vs.
Renting an Apartment**
2 bedroom / 2 bath
1000-1100 finished square feet
1 car detached garage
$1000-$1200 + utilities
| Sale Price: | $175,000 | ||||||||||
| Downpayment: | $ 3,500 | ||||||||||
| Mortgage Amount: | $171,500 | ||||||||||
| Principle & Interest @ 6.5%: |
$1084 / mo. | ||||||||||
| Taxes $1300: | $ 108 / mo. | ||||||||||
| Insurance $350: | $ 30 / mo. | ||||||||||
| Mortgage Insurance: | $ 75 / mo. | ||||||||||
| $1297 / total monthly payment with taxes and insurance. | |||||||||||
|
Standard Deduction used. Appreciation: $175,000 x 5% = $8,750 per year / 12 months = $729 per month
|
Your monthly investment to own the home in this example would be $173.83 as compared to the $1000.00 that you would be spending on rent!
**The example used above is strictly for comparison purposes only and does not represent any specific property, does not guarantee the ability to find a property with the exact criteria as listed above, and does not guarantee any specific loan rates or terms. Estimations and assumptions were used in the above example.
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