I have been thinking about buying a house last 6 months. The interest rate is 4 decades low. Here is sort of my cost analysis. I assume the house cost $150,000 and I pitch in 25% down payment. cost to buy a house House Cost.......................$150000.00 subtract 25% Down payment --------------------------------------------------- money need to borrow..... $112500 which translates to interest payment of $112500 * (0.07) = $6750 / year (assuming interest is 7%) Total Cost Per Year Interest................$6750 Property Tax.........$4000 Home Insurance...$720 Misc......................$500 ---------------------------------------------- Total.....................($11970) Now assume annual value increase of 4% (national average) Value increase........+$6000 Tax Deduction.........+$4000 --------------------------------------------- Total....................(+10,000) Annual Cost $11970 - $10,000 = ($1197) The rent I pay annual for my apartment is ($6000). According to my calculation, there is a saving of almost $5000 annually. How much saving really is a function of interest rates, % down payment, and proper value increase. I hope you guys can follow my calculation. I don't know if there are flaws somewhere in my thinking. so it appears to be cheaper to buy a house than to rent. However, if I don't live in the same house for very long, I have to pay a lot of money for a realtor to sell my house plus going through all the hassel. If I have to pay a realtor $10,000 to sell a house and I end up living in the same house for less than 2 years, it doesn't seem to be worth it.
well the common accepted standard is that owning property is about the best financial move you can make. Also, you get tax breaks for owning a house don't you? not to mention a better credit rating. Check out the area where you plan to buy and whether the houses have been appreciating. Obviously theres more things to consider than this. but its a start. ...and don't use a realtor!
tax breaks is already included in my calculation. if don't use a realtor than use what? If it is cheaper to use a realtor than it makes sense.
One of the only problems I see with not using a realitor is that and abstract is required to be done. This requires a license in most states. It may be that you can get the realitor to do only the abstract and handle the rest yourself. Most loans require a house inspection, an abstract, the checking of backdue taxes, propertly lines by surveyour, and a few other items. If you stay in a place for 5-10 years then it is worth it for the tax breaks.
