I feel like we (as realtors), always seem to encourage people to buy properties vs rent, and although that financial decision might be right for some, it is not a “one size fits all” theory. Here are some big topics of discussion regarding the debate of buying vs renting!
Now this is some forbidden territory, how do you know your property tax rate? Well, the property tax rate will vary by area and by state. The best way to determine your tax rate is to look it up in the area that you are interested in purchasing a home. This will vary by state (Texas has property tax, Colorado has income tax, VERY different!) and by county. Once you have found the tax rate for an area, this might change the affordability of a home. Continue reading to better understand what I mean.
This is a very broad topic. Why? Because monthly mortgage payments have SO many variables. Besides the usual principal and interest, there are also property taxes, HOA dues (whoa, forgot about those!), home insurance, and private mortgage insurance. When you add those up, sometimes your little $1,800 apartment rent may seem cheap. Does that mean that you shouldn’t purchase a home? Absolutely not! It just means you need to run the numbers, make an educated decision on location/price/etc of the home, and then decide. Wondering how to calculate a monthly payment? Check out Zillow’s Mortgage calculator here.
One more thing, tax rules have changed and this affects all homeowners planning to write off their mortgage interest payments. Check out that article here.
Why is cash down in this category? Well, recently the stock market has been running crazy, like when your grand mother has had too much to drink at Thanksgiving. For the most part, educated investors can make a pretty penny on invested money in the stock market. How does that matter to real estate? Well, when you put 20% cash down on a house (probably like those around you recommended), you have tied up a large portion of cash in an “investment” aka your home. But is your money growing at the same rate as the stock market? Probably not with the type of year that we have had.
End point: To each his own.
I always encourage my clients to be educated on the home buying process BEFORE we start looking at homes. This includes, getting pre-approved, and calculating affordability. Zillow is a great tool for not only calculating monthly payments (once you know how much you want to spend on a home), but can also help you determine affordability. Find the tool here.
Lastly, contact a local experienced Realtor. He or she can help guide you through the process of potentially buying a home. Note: you should NOT feel obligated to buy a home if you feel you cannot currently afford one!
And as always, if you have questions, contact me! I am happy to help! Happy Friday all!!