You may be one of the many people renting property and wondering what the Benefits of Owning vs. Renting are in Today’s Market. Owning a home is the epitome of “The American Dream” and although many homeowners have suffered substantial losses in the last decade, the dream is still alive and well. A recent study by Fannie Mae shows that 90% of renters want to own their own home some day.
The upside of the recent issues is that now there is an ample amount of homes available at reduced prices, not to mention interest rates are at an all time low.
Prices have declined so much over the past few years that in many cases your monthly mortgage payment could actually be lower than your rent payment. This is even taking into account the additional expenses that come with homeownership such as; property taxes, insurance and home maintenance/repairs. Additionally, if you continue to rent instead of buying a home, it will cost you considerably in the long run.
Let’s look at an example, using FHA financing for a 30 year fixed mortgage with an interest rate of 3.5%*:
Average Home: 3BR/2BA
Estimated Appraisal of Home: $130,000
Estimated Cost to Rent: $1,200
Down Payment: $4,550 (3 ½%)
Monthly interest and principal payment: $700/mo
Property taxes (including homestead exemption): $133/mo
Insurance: $150 per month
Total monthly payment = $983
As you can see, if you owned this home, it would be cheaper to own the home, than if you chose to rent it ($983 vs. $1,200). Not to mention the tax advantages and deductions that you will have as a homeowner.
One other major benefits of owning a home, with a fixed payment, is that your rate will never change. As a renter, you are at the mercy of your landlord, who can raise the rent each time you have to renew your lease. Not to mention, should your landlord choose to sell the home, you may be forced to move.
Here are several other advantages to owning your own home:
Mortgage rates are at record lows
You can have a pet, or multiple pets – and you don’t have to pay a pet deposit
You have creative control over your living space (think pink bathroom or striped walls)
More privacy and security (especially if you have a dog, see above)
By owning your home, you can pass it on to your children
You can make a sizable profit on your real estate investment
With the market at such a low, it will inevitably only go up, especially over time. With that in mind, it is important to see what kind of return you can gain from your investment. Let’s look at another example:
Let’s imagine you put down $10,000 on your $100,000 home (10%). Now let’s assume that after 5 years, your property increases in value and is now worth $120,000 (20% increase).
Your investment has gone up $20,000. That is your profit! Your investment of $10,000 has gained you $20,000. You would have doubled your money.
There is a feeling of pride when you own your own home and now is one of the best times to buy. If you have been thinking about buying, this may truly be the perfect time.
If you are ready, or just want to discuss your options, feel free to call me 321-946-1004 or email me firstname.lastname@example.org and I will be happy to help you!
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*Amounts are estimates only, and actual amounts may vary. Factors to consider are; interest rate, credit score and other market fluctuations.