This has been a question for alot of renters over the years. You ask yourself, rent or buy – which way is the best for me? It has always been, if you have the money for a downpayment and closing costs, to buy. There have even been times, where if you were able to buy, your mortgage payment was lower than what you had been paying for rent. Right now is one of those times!
Currently in the Shasta County it costs between $1000 to $1400 per month to rent a modest 3 bedroom, 2 bath home in a nice area. To buy in the same area or similar areas you can purchase a home for approximately $180,000 to $210,000. Based on a Sales Price of $190,000, with 3% down if you qualify for a FHA Loan, your downpayment would be $5,700. Your Loan Amount would then be $184,300, then at 5.5% interest, amortized over 30 years, your payment for Principal and Interest is approx. $1046.44 per month, plus your monthly Taxes approx. $158.00 and Insurance approx. $58.00 makes a total monthly payment of $1,262.44. This is close to or less than the rent you are paying. In Shasta County you can find move in ready homes for even less than $190,000. So, just from this one example, you see that in the long run you would be saving money by purchasing a home, instead of renting.
Recently there was an article printed in RisMedia.com where they stated the top 7 reasons why it is better to buy than rent in 2009. Here they are, as taken from that article dated 7/31/2009:
Top 7 Reasons why it is Better to Buy than Rent in 2009:
1. Buying doesn’t always cost much more than renting. According to a recent study by the Associated Press, the gap between monthly mortgage payments on a median-priced hmoe and the median rent has decreased from $777 to just $221 in the last three years (remember this is a nation wide statistic).
2. Affordability is at an all-time high. In markets across the nation, including the inland areas of California, prices have declined by nearly 40%.
3. Buyers can take advantage of tax benefits of home ownership. Perhaps the biggest tax break is reflected in the house payment homeowners make each month. For most, the bulk of that payment goes towards interest. All interest is deductible, unless the amount is more than $1 million. Property taxes are also deductible.
4. Buyers can purchase homes with little or no downpayment. Qualified first-time buyers may be eligible for loans insured by the Veterans Administration (VA), which does not require a down payment. Another loan product gaining popularity are those insured by the Federal Housing Administration (FHA), which require only a down payment of 3.5%.
5. The Tax Credit. First time homebuyers-defined as anyone who hasn’t owned a home in the last three years – are entitled to an $8,000 tax credit. (Ownership of a vacation property or a rental property doesn’t disqualify homebuyers from this program.) No repayment is required for homes sold after 36 months of occupance and ownership.
6. Mortgage rates are at all-time lows. Take advantage of low 30 year fixed rates. We haven’t seen rates this low in the last 3 decades.
7. It’s yours. It feels good to own your own home. After all, you can paint it any color you want, make improvements, and plant a little garden if you so desire.
Check it out, I think you will be surprised!
