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That's a great interest rate. But only you can decide what you can comfortably "afford." You may qualify for the mortgage but if the payments are higher than your comfort level, then look to buy something less expensive.
Your PMI will eventually go away. Rates will not stay this low forever. You can continue to pay someone's else mortgage by renting or you can start building equity in your own home investment. And don't forget that your interest is a tax write off, which also should be considered when looking at the big picture.
Cold feet is normal. Home buying is a very emotional experience. Is there anyone IRL you can talk to about this? A friend who is a first-time home buyer who's already gone through what you are going through now?
Paying rent is not paying someone else's mortgage any more than buying food is paying someone else's farm debt. Sometimes it makes sense to buy goods/services rather than buying the capital used to produce the goods/services. One has to run the numbers.
30 year loans have been around forever. Hell, I remember when interest rates on those mortgage loans were above 10%.
Banks make money, we get a house.
Whether we rent or buy, we will pretty much always have a monthly bill for something we need to live in.
In our case, this is our last home. We've rented all this time until we found the area we want to stay in for the rest of our time on this earth.
We aren't looking at a house as something to get rid of down the road and make money on. This will be our home. Not just a commodity or an investment.
yep.
And when you pay rent, there's a good chance that some of your rent each month is going to pay interest on money the landlord has borrowed.
For the vast majority of people, it's pretty much impossible to pay cash for a house (downsizers selling a house after prior ownership and time to build up a LOT of equity excluded). Paying rent every month makes it even less likely that someone would come up with enough to pay cash for a house.
OP, $2200 is a lot to pay each month, but you already know that that your budget works with $2100 in rent. Yes, there will be some other costs of ownership that come along, as they always do, but you will also get the benefits of some tax savings. And that's before the idea of building equity, which of course isn't guaranteed but then again, neither is any sort of profit if you invest in the stock market or anywhere else. And in the meantime, you still need a place to live.
And when you pay rent, there's a good chance that some of your rent each month is going to pay interest on money the landlord has borrowed.
For the vast majority of people, it's pretty much impossible to pay cash for a house (downsizers selling a house after prior ownership and time to build up a LOT of equity excluded). Paying rent every month makes it even less likely that someone would come up with enough to pay cash for a house.
OP, $2200 is a lot to pay each month, but you already know that that your budget works with $2100 in rent. Yes, there will be some other costs of ownership that come along, as they always do, but you will also get the benefits of some tax savings. And that's before the idea of building equity, which of course isn't guaranteed but then again, neither is any sort of profit if you invest in the stock market or anywhere else. And in the meantime, you still need a place to live.
With enough patience, I think most people could pay cash for a house if they really tried and waited long enough. The problem is that they assume, without even doing the math, that renting is throwing money away. So they don't want to rent and save or invest to later buy a house outright. In some cases they are right; in others they are wrong. It depends very heavily on how reasonably or over-priced the housing is in their area.
Paying rent is not paying someone else's mortgage .
How is it not, unless the LL is underwater and losing money every month, but you are still paying part of their mortgage off, and most likely you are paying their mortgage and they are making a profit and gaining equity on the property.
How is it not, unless the LL is underwater and losing money every month, but you are still paying part of their mortgage off, and most likely you are paying their mortgage and they are making a profit and gaining equity on the property.
Or the landlord has no mortgage. What you are paying for is a place to live at. If someone has a mortgage it's really immaterial to your personal situation
How is it not, unless the LL is underwater and losing money every month, but you are still paying part of their mortgage off, and most likely you are paying their mortgage and they are making a profit and gaining equity on the property.
The same way buying food is not paying someone else's farm loans off. You are paying for a good or service, not for the capital used to create the good or service.
The same way buying food is not paying someone else's farm loans off. You are paying for a good or service, not for the capital used to create the good or service.
Except that while the market ultimately sets what a landlord can charge in rent, the landlord starts off by calculating what they need to get in rent to make a profit. If that includes paying mortgage interest, that will be calculated into the price, just like the costs of doing business are calculated into the pricing of all goods and services. It may make financial sense for a buyer of those goods or services to pay someone else rather than grow the food (or whatever) themselves, but that doesn't mean the farmer isn't passing along their costs.
The same way buying food is not paying someone else's farm loans off. You are paying for a good or service, not for the capital used to create the good or service.
Except that while the market ultimately sets what a landlord can charge in rent, the landlord starts off by calculating what they need to get in rent to make a profit. If that includes paying mortgage interest, that will be calculated into the price, just like the costs of doing business are calculated into the pricing of all goods and services. It may make financial sense for a buyer of those goods or services to pay someone else rather than grow the food (or whatever) themselves, but that doesn't mean the farmer isn't passing along their costs.
You started off correct the market ultimately sets the price not the landlord's carrying costs. If the market will allow me to charge 1000.00 a month to rent my house am I going to charge less because I paid cash for the house? Probably not.
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