I have assessed the current offerings in my location and the cost to rent is very similiar to the cost to purchase. The only difference is the increased outlay of cash (10% dp) associated with purchasing. Otherwise, an apartment in a safe part of town is going to run me about $900.00 a month. Whereas a purchase, including $300 taxes per month is going to cost me about $1048 on a mortgage payment. Both are expensive for me and making me nervous, but I can afford it.
What would be your recommendations? To pay off student loans with money in the bank or to take advantage of purchasing a home now with this money. My outlook is that it is cheaper to buy a condo unit now than it will be in 3-5 years from now. Or is this possibly flawed thinking?
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You are wrong about the cost of purchase being only 10% more. Generally rent includes a number of things you have to pay for separately when you are an owner: repairs/maintenance, some utilities...
Obviously major considerations include how long you plan to remain, the real estate market in your area...
I meant 10% dp or downpayment. So in essence, if I'm purchasing I would have to give 10% down up-front. Whereas, if I rent I can use that saved money to pay off other debt (I only have student loans as debt).
Some areas in FL have had lots of speculative buyings in condos. Now the market is down it may continue to go down for a couple more years. If your local condo market is a buyers' market this selling season, it is a good bet next year price will be softer.
An easier question to answer is about your student loans. If the interest rate of the loan is lower than that of a typical second mortgage you can get (say 80-20), then you should keep the loan. Otherwise pay it off and get a second lien mortgage to finance your perspective home purchase.
you should never, i mean never pay for your own home.
Instead of Condos, Id buy a House(no matter what the price) with 2 floors and a basement, make the house into 3 separate living spaces and you and your family choose one of them. The rent out the other 2. Get a mortgage to pay for the house. Maybe a 30 year.
Lets say house is 400K
400K /30 years = $13,333 you owe each year,
$13,333 / 12 months= $1,111 amount per month you owe to the mortgage.
Now you owe the bank $1,111 a month.
You have 2 extra apartments. so expect to charge ~~150% on the amount you owe. This depends on how aggressive you are.
2x $1,666 = $3,332 the total you make every month.
$3,332 - $1,111 = $2221 in profits, plus you live free.
I didnt include the rates and fees you owe the bank, but with your added prodits, that should be no problem.
i386 said:you should never, i mean never pay for your own home.
Instead of Condos, Id buy a House(no matter what the price) with 2 floors and a basement, make the house into 3 separate living spaces and you and your family choose one of them. The rent out the other 2. Get a mortgage to pay for the house. Maybe a 30 year.
Lets say house is 400K
400K /30 years = $13,333 you owe each year,
$13,333 / 12 months= $1,111 amount per month you owe to the mortgage.
Now you owe the bank $1,111 a month.
You have 2 extra apartments. so expect to charge ~~150% on the amount you owe. This depends on how aggressive you are.
2x $1,666 = $3,332 the total you make every month.
$3,332 - $1,111 = $2221 in profits, plus you live free.
I didnt include the rates and fees you owe the bank, but with your added prodits, that should be no problem.
i386 said:I didnt include the rates and fees you owe the bank, but with your added prodits, that should be no problem.Really? You don't think including interest in figuring out your mortgage payments to be significant enough to include them in your calculations?
i386 said:you should never, i mean never pay for your own home...The only sentences that make sense in your post are "Get a mortgage to pay for the house. Maybe a 30 year." The rest is, like the rest of your posts, pure garbage. For an engineer you are REALLY bad at math. Now go away grasshopper.
i386 said:you should never, i mean never pay for your own home.
Instead of Condos, Id buy a House(no matter what the price) with 2 floors and a basement, make the house into 3 separate living spaces and you and your family choose one of them. The rent out the other 2. Get a mortgage to pay for the house. Maybe a 30 year.
Lets say house is 400K
400K /30 years = $13,333 you owe each year,
$13,333 / 12 months= $1,111 amount per month you owe to the mortgage.
Now you owe the bank $1,111 a month.
You have 2 extra apartments. so expect to charge ~~150% on the amount you owe. This depends on how aggressive you are.
2x $1,666 = $3,332 the total you make every month.
$3,332 - $1,111 = $2221 in profits, plus you live free.
I didnt include the rates and fees you owe the bank, but with your added prodits, that should be no problem. Ummm, who's going to rent 1/3 of a house for $1,666 a month if they could buy their own whole house for $1,111 (plus rates and fees owed the bank, of course). Where would you find these tenants, and if they are dumb enough to do that, do you want them living that close to you?
Of course there is no 1 right answer for everybody. Couple that with all the unknowns in your situation (how long you are going to live in the area, how secure is your job, you planning of getting married, have you ever owned before/know about repair costs, is your market going up or down, etc.) and any advice is just a guess at best.
Here goes my guess - Since your are "nervous" either way, I vote for renting. Renting has a lot less potential downside (e.g. no big surprise repair out of your wallet) and you can usually get out of the deal with maybe only a month or two notice instead of a sales commission and maybe months waiting for a buyer. Take 1/2 the potential down payment money and pay off 1/2 the student loans. Keep the rest as a emergency fund in a high interest account. Use some free time over the next few months to get better acquainted with the real estate in your area. Figure out if prices are going up or down. If up, you are comfortable with owing, and find a good house then jump on the deal. If prices are going down, or you still are nervous about owning, then keep renting.
Thank you for the great advice. I'm not concerned about the mortgage payments because it is well within my means. The only thing that sucks is the tax of $300 a month. Is there any way of getting some of this back or reducing the tax ammount?
brerpie said:Thank you for the great advice. I'm not concerned about the mortgage payments because it is well within my means. The only thing that sucks is the tax of $300 a month. Is there any way of getting some of this back or reducing the tax ammount?$300/month for taxes seems high for a condo - are you sure that is correct.
At least property taxes are tax deductable against your income tax so in a sense you can get some of it back.
DeanaCal said:i386 said:you should never, i mean never pay for your own home.
Instead of Condos, Id buy a House(no matter what the price) with 2 floors and a basement, make the house into 3 separate living spaces and you and your family choose one of them. The rent out the other 2. Get a mortgage to pay for the house. Maybe a 30 year.
Lets say house is 400K
400K /30 years = $13,333 you owe each year,
$13,333 / 12 months= $1,111 amount per month you owe to the mortgage.
Now you owe the bank $1,111 a month.
You have 2 extra apartments. so expect to charge ~~150% on the amount you owe. This depends on how aggressive you are.
2x $1,666 = $3,332 the total you make every month.
$3,332 - $1,111 = $2221 in profits, plus you live free.
I didnt include the rates and fees you owe the bank, but with your added prodits, that should be no problem. Ummm, who's going to rent 1/3 of a house for $1,666 a month if they could buy their own whole house for $1,111 (plus rates and fees owed the bank, of course). Where would you find these tenants, and if they are dumb enough to do that, do you want them living that close to you?
i386 said:DeanaCal said:i386 said:you should never, i mean never pay for your own home.
Instead of Condos, Id buy a House(no matter what the price) with 2 floors and a basement, make the house into 3 separate living spaces and you and your family choose one of them. The rent out the other 2. Get a mortgage to pay for the house. Maybe a 30 year.
Lets say house is 400K
400K /30 years = $13,333 you owe each year,
$13,333 / 12 months= $1,111 amount per month you owe to the mortgage.
Now you owe the bank $1,111 a month. Even for the worst apartment here in the bronx, you arent looking at less that 1k a month and houses usually go for $400K.
You have 2 extra apartments. so expect to charge ~~150% on the amount you owe. This depends on how aggressive you are.
2x $1,666 = $3,332 the total you make every month.
$3,332 - $1,111 = $2221 in profits, plus you live free.
I didnt include the rates and fees you owe the bank, but with your added prodits, that should be no problem. Ummm, who's going to rent 1/3 of a house for $1,666 a month if they could buy their own whole house for $1,111 (plus rates and fees owed the bank, of course). Where would you find these tenants, and if they are dumb enough to do that, do you want them living that close to you?
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