BENEFITS OF BUYING
vs renting. 


 


Not sure if you CAN buy a home?  The rent you are paying could be put to much better financial use and be used to build equity in your own home.  Do you realize how much you pay in rent each month adds up over a period of time?  This chart gives you a snapshot of what’s happening to your money and quite frankly should alarm you.

 

RENT

5 YEARS

10 YEARS

15 YEARS

20 YEARS

25 YEARS

30 YEARS

$1,000

$60,000

$120,000

$180,000

$240,000

$300,000

$360,000

$1,500

$90,000

$180,000

$270,000

$360,000

$450,000

$540,000

$2,000

$120,000

$240,000

$360,000

$480,000

$600,000

$720,000

$2,500

$150,000

$300,000

$450,000

$600,000

$750,000

$900,000

$3,000

$180,000

$360,000

$540,000

$720,000

$900,000

$1,080,000

$3,500

$210,000

$420,000

$630,000

$840,000

$1,050,000

$1,260,000

$4,000

$240,000

$480,000

$720,000

$960,000

$1,200,000

$1,440,000




   RENT     

   BUY       

No interest payment deductions

Deductions for your mortgage interest paid

Rental amount may increase at any time

Mortgage payments can be fixed

Landlord approval needed for any changes

Decorate and make changes as you wish

No capital appreciation; your money disappears

The value of your home may increase over time

Rent is temporary. You may be subject to 30 day’s notice

Your house is your home, no a temporary living situation


The $60,000 QUESTION: Can You Qualify for a Home Loan?

This should not serve as pre-approval and merely gives you a some general guidelines. Leave the actual
pre-approval process to a licensed professional.

Let’s say your annual household income is $80,000 or $6,667 per month gross (before taxes). General
rule of thumb is no more than half of your monthly income can be used to cover the mortgage payment including property tax, insurance, HOA plus any minimum monthly payments such as car and charge card paymentst. To purchase a home (single family or condo) for $550,000 with a minimum down payment of 5% (possibly as low as 3%), you would need $27,500 for your down payment.  There may be some closing cost; we’ll estimate $4,000 as a fair estimate. For a single family purchase, you will be required to purchase a homeowners policy. Let’s estimate $900.00.  The lender will also require that you have at least a couple of months mortgage payments remaining in your bank account after close. In other words you cannot use your last dollar and be left penniless. Makes the bank feel understandably uncomfortable.  The good news is that other than the 5% (or less) down
payment, the rest can be a gift from a family member.

So here’s how a loan payment might look based upon the above purchase price with 5% down:

Loan Amount  $522,500
Principle and Interest Payment $2,570.39*

Property Tax/Insurance                $579
Total Payment                              $3,149

Qualifying using 50% of your monthly income.  Max Debts allowed including new mortgage, tax insurance, HOA, other debts you have is $3,333.  This leaves about $185 a month for other payments.

Talk to your Realtor and your Mortgage Broker about getting pre-qualified.  It only takes about 15 minutes of your time over the phone – that’s 15 minutes to the start of possible dream of home ownership.

888-976-1040


*using a rate of 4.25%; apr not calculated as this is not a real time quote




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