Rent or Buy
To rent or to buy, that is the question… The time old debate of whether to purchase a home versus renting an apartment or house has surely crossed the minds of every person at least once in their life. The truth is that the answer will depend on your lifestyle. Let’s break down some hard numbers so you can evaluate your options.
A person renting a space for $1,400 + utilities per month for 5 years with an average rent payment increase of 1% per year will pay a total amount of $85,696.88.
Whereas, if you purchased a beautiful Florsheim Homes Arbor house for $335,000 with 20% down, taking a loan amount of $268,000 at an interest rate of 4% and average about $900 per year towards maintenance, then you would pay a total amount of $103,768.38. The difference over five years is $18,000 but annually breaks down to a mere $3,600, or $300/month. But keep in mind that when you own a home, the government allows you a tax write-off! If you are in the tax bracket of 26%, you pay $3,000 per year in taxes and $1,500 for annual insurance and if your home appreciates by even 0.5% annually then the appreciated value after 5 years would be $343,459.17. If you then plan to sell the home after 5 years and pay the Realtors an average commission of 6%, then your benefit amount will be $66,280.79.
The bottom line is that you will SAVE money in the long run by purchasing a home! Sixty six thousand dollars isn’t anything to scoff at. Many people think that they do not make enough money to afford a home yet many are pleasantly surprised to learn that they actually can. The annual tax-writeoff plays a large part in affordability. If you can manage to allocate an extra $300 per month towards mortgage rather than rent, then not only will you be able to purchase privacy in the comfort of your very own home but you will be obtaining the American Dream while allowing the market to build equity for you. I recommend that Buyers purchase a home that fits their current lifestyle and budget. If your family eventually grows and you need a little more space, then in 5 years you will have a nice stash of $66,000 resting inside your home that you can utilize towards an even larger home.
when you purchase a house from Florsheim Homes you get a 10-year home warranty along with stainless steel GE appliances, energy efficient upgrades and reputable customer service. Now is such a fantastic time to buy a home due to the interest rates still being historically low! Did you know that in the 1980’s interest rates were almost 20%??? Time is of the essence because who knows how high the rates will be in 5, 10 or 20 years when some people may feel that they are a little “more ready to buy”. Furthermore, when you purchase a home your monthly mortgage payment will always be the same whereas rental rates can, and usually do, change each year. By purchasing a home now, you can rest assured that your interest rate will be locked in for 30 years! That is a huge deal. If the rates ever drop down to record lows in the 2% range again, then you can always just refinance. It’s a win-win.
Renting can be a great option when you are getting used to a new area, or have not yet decided where to develop roots. After your first year of an apartment lease has ended, you may have experienced what it’s like to share a community laundry facility, or crowded gym, you’ve learned how to request necessary unit maintenance from the landlord, or which hours are the best to snag a guest parking space. Renting a house can offer a bit more privacy but home-renters always run the risk of eviction when an owner decides to cash in their equity and sell that home. Although rental rates may typically be slightly less than a standard mortgage some opportunity costs, such as privacy, stability and equity may becoming a little more prevalent. You might have a relative or friend in your ear telling you that you are throwing your money away by paying a landlord each month instead of building equity in a property.
To rent or to buy, that is the question… So which will it be; a crowded, used, stranger-filled complex or a gorgeous, brand new, clean, stable, private home of your own? Which option fits your current lifestyle the best?
Arbor Floor Plan
Florsheim Homes | Rose Park | Modesto, CA
3-4 Bedroom | 2 Bath | 1,664 SF
View more information at: www.FlorsheimHomes.com