smallbusinessgrants123.net

Author: Peter Jordan

Should you buy or rent? It depends on your circumstances, and the real estate market where you are going to live. Years ago, I sold a Westfield home for a young couple who owed almost as much as the sales price on their house. They needed to take money from savings to pay the closing costs and sales commission. You can bet that they wished they had rented for the couple years they lived there.

This brings up the first thing to consider when comparing buying versus renting: the amount of time you’ll be there. Buying and later selling a home will usually cost about 10% or more of the value of the home. These costs mean that if the home only went up in value 10% or so in the year or two you lived there, you won’t be gaining anything (equity gain from principal pay-down is very little in the first years). You’ll often be better off renting if you’ll be in a town for less than a few years.

What about Westfield New Jersey real estate which has historically shown a much faster rate of appreciation? Have you done some serious homework? If not, to assume appreciation will be more than the rate of inflation is just gambling. The sellers in the example above sold for the same price they bought the house for two years earlier – and this was in a decent and growing area. You can’t count on fast appreciation just because it has been that way recently.

To Buy Or Rent – Cost Comparison

Looking at buying versus renting, you have to take into account that in many places it costs much more to buy. In Tucson, Arizona, for example, a small home can cost $200,000. The mortgage payment, taxes, insurance and maintenance will add up to about $1,600 per month, but you can rent the same size home for about $800.

What does that mean? Many real estate fanatics will say you’re at least buying something for your money, and renting is throwing your money away. Of course in this example more than $1,000 of your payment will be going towards interest alone, and that’s not buying you anything.

Suppose you can afford the $1600 per month, but instead you rent for $800 and put the other $800 into a decent safe investment that makes you 5%? In three years you’ll have over $30,000 in this account. If the home appreciated at 6% per year (it has been more like 25% per year recently, but that can’t continue, and assuming so is not planning, but gambling), it would be worth $231,000. The costs of initially buying it and then selling it would be around $13,800 (2% buying and 6% selling), leaving you with a gain of about 19,000 once we include your principal pay-down.

In other words, you would be at least $11,000 better off if you rented and banked the difference. Every market is different, of course, so you have to do the math. Compare the total costs of owning versus renting, and then make safe assumptions about the rate of appreciation for Westfield New Jersey homes  if you’ll definitely be in one place for a long time to come, it will almost always be better to buy than to rent. In the last example, buying becomes a better bet after about four or five years. Also consider that if you get a fixed rate mortgage, your payment will never change, a benefit landlords won’t offer you that on your rent payment.

 To sum up, look at the time you’ll be there, the comparison of total monthly costs, whether rents are going up fast, and whether you have good reason to believe home prices will be going up fast. Then look also at all the personal factors. Do you want to be responsible for the maintenance, yard work and unpredictability of ownership problems?

To buy or to rent? In the end, you have to work this one out by yourself.

Related posts:

1. Tips on Buying A Foreclosed Property in Westfield, New Jersey Buying foreclosed properties is getting more popular and more profitable every day. There are dozens of foreclosed properties hitting the...
2. The Benefits of Buying Unfinished Westfield, New Jersey Homes By purchasing unfinished homes, you give yourself the potential to save a lot of money. When buying unfinished homes for sale...
3. What To Look For When Buying A New, Westfield New Jersey Home Author: Peter Jordan   It’s a good idea to think about what you should look for when you purchase new ...
4. How to Make Money Real Estate Investing in Australia Investing in Australia to make money in real estate is not child’s play. Home ownership is an important factor for...
5. Forms of Real Estate Investment – Industry Real Estate is Also Divided Into Several Categories The idea of real estate and property is much a whole lot more than just finding a household. There are...
6. The Importance of Staging Your Westfield New Jersey Home for Sale Author: Peter Jordan   The booming real estate market of 2006 has reached a cooling off point for most places...
7. The First Point to Retain in Mind Should You Like to Purchase Extra Real Estate – Things You Ought to Know Associated With Purchase Added Real Estate Real estate doesn’t have to stop at purchasing a house. You can find various methods to invest, turn the property...
8. What is the Right Price to Offer for a Home in Westfield New Jersey? Once you’ve found a home in Westfield New Jersey you’re interested in purchasing, the next step is putting an offer...
9. A single Very Important Person That Is Part Belonging to The Real Estate Expense Plan Will Be The Real Estate Bird Dogs Expense is a quantity 1 word for real estate. However, those that play a component in the expense will make...
10. A Single of The Definitions to Consider When Acquiring to Know People Who Are Involved in Real Estate Could Be The Real Estate Brokers In the location exactly where everyone’s profession influences your life-style, you might want to understand the distinctive roles. 1 with...