Let’s face it; you’ve got to live somewhere.
Unless you live in your parents’ basement or a cardboard shack, the only way you won’t be paying for shelter is to own your own home outright. And the only way that will happen is with a home purchase. But with so much media noise about the housing market, there’s never been a greater need for accurate and reliable information.
Most people are understandably cautious about buying in an uncertain market. Long-term security is an overriding concern in making a wise and informed decision. The best way to “play it safe” is actually to buy a home. Here’s why: studies show that owning a home is the best way to build household wealth. The sooner a person owns a home, the faster they begin to build up equity and wealth. Studies are also showing that the housing market is finally “bottoming out”. There’s only one way to go from here.
When buying a home, you’re really buying price stability. With a fixed-rate 30 year loan, your monthly mortgage will never change. And with interest rates in the 3-4% range, financing your home has never been more affordable.
Now let’s consider the current rental market. While home prices stabilizing, rental costs continue to rise. In the Salt Lake metro area, today’s average rental price for a 3 bedroom, 2 bathroom apartment is $975. By comparison, the monthly payment on a $175,000 home at a fixed 3.75% interest rate with 3.5% down is
about $1006 (P&I, PMI, T&I).
Renting doesn't provide the stability you need!
There’s no long-term payment security when you rent; every time your lease expires, your landlord can opt to increase your rent. Additionally, paying rent doesn’t provide the tax benefits of homeownership.
All things considered, now is a terrific time to buy a home. Continuing strength in rental demand signals that there is increasing upward pressure on rental prices. The real risk isn’t in buying a home; it’s in missing out on a great opportunity.
|
Years |
Rent Payment |
Mortgage Payment |
Monthly Difference |
After Tax Savings |
Yearly Difference |
After Tax Savings |
|
|
1 |
975 |
1006 |
-31 |
+123 |
-372 |
+1476 |
|
|
2 |
1000 |
1006 |
-6 |
+130 |
-72 |
+1560 |
|
|
3 |
1025 |
1006 |
+19 |
+168 |
+228 |
+2016 |
|
|
4 |
1050 |
1006 |
+34 |
+183 |
+408 |
+2196 |
|
|
5 |
1075 |
1006 |
+69 |
+218 |
+828 |
+2616 |
|
|
6 |
1100 |
1006 |
+94 |
+243 |
+1128 |
+2916 |
|
|
7-30 |
RISES OVER TIME |
1006 |
RISES OVER TIME |
RISES OVER TIME |
RISES OVER TIME |
RISES OVER TIME |
In many cases, the amount of money a renter spends on rent can be about the same as or less than the amount a homeowner spends on a mortgage. With the tax benefit for homeowners, the savings can be significant. Because there is a tax deduction for the interest you pay as part of your mortgage, you can actually write off where you live!
The benefits of buying instead of renting includes building equity, paying your own mortgage and not someone else’s, a sense of community, ability to change any and all colors and decorations, and you are not depentant on someone else for maintenance and repairs.
Building a new home gives you exactly what you want! Let Distinctive Homes find the perfect home, townhome, condo, amenities for you!
