Archive for September, 2010

Renters are losers!

Friday, September 3rd, 2010

Economy and unemployment weighs on the minds of potential home buyers…..

If you’re renting today, you are losing out on some really great opportunities. A recent national study done by the “The Associated Press by Marcus & Millichap Real Estate Investment Services” shows that the gap between renting & owning is around 100 bucks per month.


Are you scratching your head? I would be…..


If you don’t currently own a home, you have to rent somewhere. The last time the gap was even this close was back in 1993, and back then the gap was around $264. This was based on a study done on 45 metro areas. These numbers also are based on conventional loans with 10% down and a rate of 5.07 percent – and rates are lower now.


Even though these numbers vary depending on the market you live in, unless you live with your parents, renting is inevitable. With these types of numbers, it really makes no sense to rent regardless of the market.


Other factors should be considered when renting vs. owing a home. When you own a home you also get tax deductions for interest paid and your property taxes. You don’t get any tax deductions for paying the landlords’ rent. So if you consider the current gap and the tax benefits, renting becomes less favorable.


In addition, locking in to a low interest rate on a bargain-priced home means your house payment won’t go up. But, as prices and interest rates begin to rise, so will rents. Within just a few years you’ll pay more in rent than you would be paying on the home you purchased this year. And you won’t have anything to show for it but rent receipts.


But what if you lose your job after you’ve purchased a home?


Let’s assume you do…. What is the difference in losing your job while you rent? Most of this is just physiological and with a little understanding a light will start to go off.


With the interest rates at 4.25% and all the great deals on homes, this current market is a dream for any potential home buyer.


I would not worry about losing your job, I would worry about missing the boat on the great deals and low rates. We can’t control the market anyway….


These low rates will not last long and if you lose your job, you still need a place to live. I would rather lose my job while owning a home vs. renting. There really is not much difference in payment considering the cost of homes and low rates currently.

 Author: Mike Clover

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