A question that surfaces on most people’s mind at some point is, whether to rent or to buy a home or condo. The first thing that pops to mind is affordability but there are other factors, such as job stability, relocation possibilities and lifestyle. If you intend on being in an area like West Chester, Liberty Township, Fairfield Township, Mason or Monroe, Ohio for at least two more years, your income is steady and purchasing a home fits your lifestyle then it is time to break out a pen, paper and a calculator and see if buying makes more sense financially than renting.
At first glance buying a home makes more sense than renting because of the ability to gain equity in a home, especially in today’s market with the lowest home prices in years and historically low interest rates. For First Time Homebuyer’s there is also the $8000 tax credit for purchasing a home to factor in.
There is no sense making a two column list when it comes out to equating the cost of renting and buying. Renting is a fixed equation, the monthly number typically doesn’t change. To compute your costs for buying a home you look at the following:
- Purchase price
- Down payment amount
- Loan Amount
- Loan Term
- Interest rate
- Property taxes
- HOA fees
- Monthly mortgage payment
- Home owner’s insurance
- Mortgage insurance
Your monthly costs will include your mortgage payment, property taxes, insurance, and any HOA dues that may exist. If these numbers add up to an amount you can afford it could make sense for you to purchase a home instead of rent. The important thing to remember is that once you buy a home you are not going to have a landlord to rely on to make repairs so factor in putting aside some extra money for a home repair and maintenance account.
Buying a home is an important decision and one which can add to future security and financial stability if done with great thought and evaluation.
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