BLOG: Is Renting Hazardous To Your Wealth?
It’s amazing how much money you pour into your landlord’s pocket over time when renting a home or an apartment.
|
Monthly Rent |
After 3 Years |
After 4 Years |
After 5 Years |
After 6 Years |
|
$800 |
$28,800 |
$38,400 |
$48,000 |
$57,600 |
|
$900 |
$32,400 |
$43,200 |
$54,000 |
$64,800 |
|
$1,000 |
$36,000 |
$48,000 |
$60,000 |
$72,000 |
|
$1,100 |
$39,600 |
$52,800 |
$66,000 |
$79,200 |
|
$1,200 |
$43,200 |
$57,600 |
$72,000 |
$86,400 |
|
$1,300 |
$46,800 |
$62,400 |
$78,000 |
$93,600 |
|
$1,400 |
$50,400 |
$67,200 |
$84,000 |
$100,800 |
|
$1,500 |
$54,000 |
$72,000 |
$90,000 |
$108,000 |
|
$1,600 |
$57,600 |
$76,800 |
$96,000 |
$115,200 |
With interest rates at historic lows, buying power is HUGE! Let’s put this into perspective:
In 1989 the average home cost was $94,000; while interest rates were at 10 percent (payment would be $825 per month). In 2011 the average home cost was $166,100; while interest rates were 4.45 percent (payment would be $837 per month). The difference in monthly payment is only $12 per month!
Call Laura Snyder at 410.375.5779 or email laurasnyderhomes@gmail.com for a free consultation. Let’s make your money grow for you and start paying your own mortgage – not someone else’s. For more information, visit www.listingwithlaura.com.
Karl Schuub
10:13 am on Friday, March 23, 2012
Why don't you just place an ad?
Bill Lasley
4:20 pm on Friday, March 23, 2012
Thanks for being the patch's unofficial, unwanted blog police Karl. Get a life dude!
Really...
11:33 pm on Friday, March 23, 2012
How about the people that can't get a mortgage. Renting is their only option. And without any long term commitments some people prefer renting.
Eric bel air
10:48 am on Saturday, March 24, 2012
There's a bunch important things missing here. I don't see anywhere in this blog that mentions the added costs associated with buying a home vs renting. The 20% down payment (this isn't 2007 where you can get a mortgage for 0 down) and property tax. The 166k house will have around $1700 per year (more if in one of the towns) in property tax that's not mentioned will go up when property values increase. Figure hazard insurance is around $500 a year too.
Also 20% down on the 166k house is $33k! not including the closing costs that a renter wouldn't have to come up with. These days who has $33k sitting in the bank, with reserves? Don't put down 20% and you pay PMI. And then, there's maintenance and repair. In Harco a $166k house is likely to be an older house unless you buy a small condo. There's going to be repair costs that a homeowner fits all the money for. If you rent, all you do is pick up the phone.
As demonstrated in the previous years you can't depend on real estate to "make your money grow for you..." Also if you rent you're not trapped in a house. Need to move? Give notice and you're on your way. Buying is not for everyone (and I pay a mortgage).
Samantha
4:58 pm on Wednesday, March 28, 2012
Actually, I take exception to the fact that you assume everyone has to put 20% down and that the buyer is completely responsible for closing costs.
FHA loans allow homebuyers to put down 3.5%. Many real estate deals involve sellers and buyers contributing to closing costs. Plus property taxes can be included in a monthly mortgage payment, where the money goes into escrow until the tax bill comes. While the point about PMI is somewhat accurate, PMI can be dealt with down the road, once you have built up enough equity in the property to refinance and remove PMI from your monthly mortgage payment.
Also, feel free to search www.franklymls.com for houses in Harford county. You would be surprised what you can get for $150k!!
Eric bel air
7:41 pm on Wednesday, March 28, 2012
Samantha, you sound like another real estate agent. Yes there is the FHA loan but they have their disadvantages too. And there are programs for first time home buyer's too even paying PMI- in our neighboring Balt county there's programs that assist with the downpayment and settlement expenses (SELP and MALP). And the VA loan for veterans etc... but I'm sure you're familiar with all of these already.
I bought a house in Harf Co not long ago after the crash so I'm aware of the loan options and the pricing around the area. I stand by my statement $150k buys you a condo/townhouse, an older house, a foreclosure needing a ton of work (more money), or in a less desirable part of town, or a combination of the above. I challenge you to show me otherwise, especially in Bel Air proper which is where this edition of Patch is based.
But that's all beside the point- this blog asks "is renting hazardous to your wealth" but was missing many points. Sure, the property tax gets rolled into the escrow as does the hazard insurance, but it still ups your per month payment. The $837 figure in the blog obviously DOES NOT include this. And I still see nothing about the cost of repair and maintenance but the reality is, it's there. A new roof costs upwards of $8000+. Renter? Pick up the phone and the landlord takes care of that.
I would have much rather seen a blog weighing the pros and cons of buying, or the various loan methods & programs available, especially for the 1st time buyer.
Dawn Wis
1:21 pm on Monday, March 26, 2012
I see that nothing is mentioned about how it is harder today than EVER to buy a home!! Why dont you do an article on how buying a house has really changes over the years and some people do not have a choice. One way article....
JustObservin
1:43 pm on Monday, March 26, 2012
Maybe the author was targeting a specific audience. IE: people who are interested in and capable of purchasing a home instead of renting. If you have decent credit, pay your debts, and can save a modest amount of money, you can be a home owner! I purchased my first house in 2005 at 23 years old while I was maaking 8 bucks an hour working two jobs. ANYONE can do it if they have the dedication to stick with it.
Laura Snyder
2:34 pm on Monday, March 26, 2012
I appreciate all of the feedback, and yes, buying isn't for everyone. It's situational.... Indeed, lending restrictions are making it harder than ever to purchase. I will keep that issue in mind for a future blog.
Joseph Shmoe
1:26 pm on Tuesday, March 27, 2012
Ms. Snyder,
While this starts out to be helpful information. It quickly becomes clear that you need to buy advertisement space here. Otherwise, one might view you as a parsite rather than a contributor.
Karl Schuub
6:30 pm on Wednesday, March 28, 2012
I'm sure Laura is a very nice person - no harm, no foul; we all understand that agents almost act as their own small businesses to where without someone walking through the door they don't get paid and things are tough out there. My comment was only meant as half suggestion/half complaint. I'd hate to think a sudden hoard of small businesses would fill this site with something other than really wanting a conversation. Maybe if it had been wordy a bit differently it might have seemed something other than an ad.
Fed up
7:33 pm on Wednesday, March 28, 2012
Atleast when I rent if something needs repaired I dont have to pay for it
steven bradley
7:56 am on Sunday, April 1, 2012
You pay for it. It is included in your rent. You just don't have to write another check for it.