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For 2700 a month, You should be buying a 320,000 house (including some downpayment) 2700 is your payment including PITI. And you own the place!
Homeownership is not for everyone. A little hands on goes a long way.
Well, the real factor in rent vs. buy is the amount of time someone plans to stay in the home. A $320,000 home is going to cost $19,200 to sell just in real estate comissions, assuming the price stays stable. Overall, unless someone is looking to stay for around 10 years, buying is a poor financial move in all but a whacked out bubble market.
Essentially, by keeping the down payment for the home invested in something reasonably safe one should be able to break even or come out ahead by renting in the short term, meaning less then 10 years. Remember, while one is "pissing away" money on rent over that time, they would also be "pissing away" most of their mortgage payment on interest. It doesn't matter what the rate is, the amortization tables all work the same. In the first ten years, roughly 75% of every dollar is just going to interest payments.
OP, this calculator has been posted on here before, but I think you may find it useful. It is one of the most comprehensive "rent vs. buy" calculators out there. Just make sure you look under the optional tabs as well to really customize it to your situation. What it will all come down to, again, is how long do you plan on staying in the property?
Even with the historically low rates? We are not planning on staying longer than 4-5 years. I hate to pay rent. Would love to buy a townhome, but the association fees are a kill. Entry level homes with excellent school districts are all tiny capes, rents are on the rise...
Renting,even though it offers freedom, IS very risky because you pay to move in, a year later the owner decides to sell and you must pay for another move. On and on. Rents also increase every year. With that in mind it is not a good time to be a FIRST TIME home buyer in NJ, but I think we will take the plunge even if for 5 years.
For 2700 a month, You should be buying a 320,000 house (including some downpayment) 2700 is your payment including PITI. And you own the place!
Homeownership is not for everyone. A little hands on goes a long way.
Well actually, as long as there is a mortgage, the BANK owns the house as many have discovered. Plus, if you don't pay property taxes it's amazing how quickly a lein can be put on it and of course, if you don't pay that, it's amazing how quickly you can find out how much that home isn't actually owned at all.
But you CAN paint it whatever you want and knock out as many walls as you would like!
Even with the historically low rates? We are not planning on staying longer than 4-5 years. I hate to pay rent. Would love to buy a townhome, but the association fees are a kill. Entry level homes with excellent school districts are all tiny capes, rents are on the rise...
Renting,even though it offers freedom, IS very risky because you pay to move in, a year later the owner decides to sell and you must pay for another move. On and on. Rents also increase every year. With that in mind it is not a good time to be a FIRST TIME home buyer in NJ, but I think we will take the plunge even if for 5 years.
Run the calculator and see what it says. You need to compare the rent cost to the actual cost of buying, maintaining and then selling the home. In that you need to account for lost opportunity cost on your money and the cost of completing the real estate transactions. I've almost never seen a scenario where buying is the better choice over 4-5 years, from a pure financial perspective. Only you have all the numbers and know your personal situation, we're all just trying to help you make an informed choice. It is not nearly as black and white as "rent is throwing money away" as many realtors would you lead to believe. Owning a home is expensive and so is the process of buying and selling one. You need to look at all the numbers.
Quote:
Originally Posted by manderly6
There are non-monetary consideration in buying vs. renting. Not everything comes down to dollars.
Very true. I personally think of buying home as a far more emotional decision then a financial one. You can't completely ignore the finances, but the emotional aspects are what people ultimately decide on. The question "is buying right for me" is ultimately something only the person themselves can answer. In this persons case, I don't see how it makes financial sense to buy for a 4-5 year stay, but emotionally it may be the right choice.
Even with the historically low rates? We are not planning on staying longer than 4-5 years. I hate to pay rent. Would love to buy a townhome, but the association fees are a kill. Entry level homes with excellent school districts are all tiny capes, rents are on the rise...
Renting,even though it offers freedom, IS very risky because you pay to move in, a year later the owner decides to sell and you must pay for another move. On and on. Rents also increase every year. With that in mind it is not a good time to be a FIRST TIME home buyer in NJ, but I think we will take the plunge even if for 5 years.
There are townhouse complexes across the state that are owned by management companies and are all rentals. The fittings are probably lower quality than on truly "private" rentals but you wouldn't have to worry about the risk of needing to move and most have round the clock maintenance crews so if the AC goes in the middle of a sweltering night, someone will be out to fix or replace it.
Also a lot of towns have caps on how much rents can increase - around 3% is typical.
"devaluation" and "equity" CAN happen at the same time. what seems contradicting?
if i were to buy a 100k house cash down, 2 years from now, it could be worth 95k in which case i have a devaluation of 5k but equity of 95k.
If you claim that the property has lost value, then you may not be gaining equity. Property value and equity are both part of the same equation.
In your scenario, You did not gain equity as was implied.
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