When comparing the cost of owning a home to renting, there is more than the difference in house payment against the rent currently being paid. It very well could be lower than the rent but when you consider the other benefits, owning could be much lower than renting.
Each mortgage payment has an amount that is used to pay down the principal which is building equity for the owner. Similarly, the home appreciates over time which also benefits the owner by increasing their equity.
There are additional expenses for owning a home that renters don't have like repairs and possibly, a homeowner's association. To get a clear picture, look at the following example of a $300,000 home with a 3.5% down payment on a 4.5%, 30-year mortgage.
The total payment is $2,264 including principal, interest, property taxes, property and mortgage insurance. However, when you consider the monthly principal reduction, appreciation, maintenance and HOA, the net cost of housing is $1,218. It costs $1,282 more to rent at $2,500 a month than to own. In a year's time, it would cost $15,000 more to rent than to own which is more than the down payment and closing costs to buy the home.
With normal amortization and 3% annual appreciation, the $10,500 down payment in this example turns into $112,00 in equity in seven years. Check out your own numbers using theRent vs. Ownor call me at (701) 240.7355. Owning a home makes sense and can be one of the best investments a person will ever make.
Author:Mary Shelkey-Miller Phone: 701-240-7355 Dated: July 18th 2018 Views: 189 About Mary: MSM Realty, Inc. was established in December of 2013 by me, Mary Shelkey-Miller.
I started selling ...
We recently changed our name BUT we have not changed the service that we provide!! We are a small company that pays attention to the client first and foremost. We have been in business since 2013 and have been growing a little each year. We work with buyers, sellers, investors, and commercial sales. Our agents are ready and willing to help you with all of your real estate needs.
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"Mary is an amazing lady and agent. Any time we had a question or anything she was always right there for us. She walked us through the buying process and helped us and was right by our side every step of the way and continues to be there for us. We think she is awesome and will always use her as our agent! We couldn't have asked for a better agent! "