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Owning Cheaper Than Renting?

December 4th, 2009 · No Comments

Mortgage calculator torontoRefinance.ca

As many of you have noticed, the price of housing has come way down in the past few years. In many cases, it’s now cheaper to buy then to rent. No joke. It’s a reality which I don’t believe many people realize.

Let’s take a $130,000 home which is the median price of a home in Orlando currently. The mortgage amount on that home would be $125,450 on an FHA loan with the principal and interest payments being $748.39. You add taxes and insurance to the whole thing it’s still only about $900. There’s a fee called the MIP premium with FHA loans and that’ll probably puts you around the $1,000 mark. It’s basically what you’ll have to pay for a pretty crappy apartment.

On top of all that, you get $8,000 in cold hard cash if it’s your first home. Home buyers who’s lived in their residence for at least 5 years can get a credit up to $6,500. These tax credits are also now available to individuals earning up to $125,000 or couples up to $250,000 although there’s fewer of us in this particular earning situation.

You also get to write off most the interest and taxes on your new home which should mean a deduction around $10,000 from your income taxes for a property in the price range used in the example above.

It’s a great time to buy, but you’re not gonna make money on appreciation overnight. My suggestion is that you plan on staying in the property you buy a minimum of 5 years and preferably 10 years. The days of flippin real estate are over, but look at all the advantages you have in buying right now.

Your payments don’t go into some black hole like when you rent, they go towards increasing your tax deductions, accumulating equity, and the value will eventually increase although it may not be real soon.

The inventory levels in Orlando have finally come down to a reasonable 6-7 months which is typical of a stable market and prices have already come down 50% or more in many areas.

I’m not a fortune teller and can’t predict what the market will do but heck, look at all the savings you get even if prices stay stagnant for an extended period of time.

So I guess the answer is “heck yeah it’s cheaper!”.

Average1109

Tags: Real Estate Tips