Cheaper than rent, why pay rent
If you will be requiring housing while you are in school for 3, 4 or 5 years, there are some important facts here that you may want to consider regarding paying rent.
You have seen the ads saying "cheaper than rent" or "why pay rent". Simply translated it means thereare specific benefits to home ownership.
1) Currently available Federal Housing Tax Credit of 10% of the purchase price, up to $8000.00 for 1st time home buyers. (That includes anyone that has not owned real estate in their name in the past 3 years) This money comes to you in the form of a rebate on your federal income tax return. If you purchase a property in 2010 before April 30th you can claim this credit on your 2010 tax return OR can send in an amended tax return for 2009 and can expect the money in about 12 weeks. This money can be used anyway you wish, improvements to the property, trip to Disneyland, pay down the mortgage, buy new furniture, a car, pay down student loans or just bank the money for a rainy day.
2) As an example, let's say you pay $600 a month rent for your current residence. With security deposit and monthly rent at the end of 3 years you have paid $22,200.00! When you get ready to move, you can expect the landlord to return your security deposit of $600 if you leave the property in good, clean condition. If you invest that same amount as a monthly house payment on an approximately $70,000 property, the payment including taxes and insurance, you will have built equity of around $2659 if the property should not go up in value, but remained the same as when you purchased it. That's a difference of $2059 more to you over that same 3 year period. More if the market value goes up or you make improvements.
Consider this: Worst case scenario...you make all your mortgage payments for 3 years, anticipating graduation and moving on, you sell the house for just what you paid for it. This isn't rocket science...you just made approximately $7000.00 (10% of purchase price on the example of $70,000) from the lst time home buyer tax credit for living somewhere for 3 years!!! That's right you just lived somewhere while you went to school for FREE!!! plus you made $7000.!!!! Let's say you sell the property for $10,000 less than you paid for it 3 years before, just for the sake of looking at the glass as half empty, the federal tax credit gave you a $7000.00 rebate so you have paid $3000.00 for 3 years of housing, that breaks down to $1000 a year for housing
Keep in mind that there is always the chance that the property will go up in value in which case you will have lived for FREE and MADE MONEY!!!
3) Additionally as a home owner, you may have the benefit of approximately $4700.00 in a tax deduction (in these 1st 3 years, using the $70,000 example) reducing your tax bill and putting more money in your pocket.
4) Pride of ownership and ability to decorate the way you want. Ever want to enhance where you live to meet your personal taste, only to find that it is against your lease agreement? Would you like to have a garden? Want to put up a fence? Have a pet? Hang a picture? Have a barbeque in the back yard? 5) You won't have someone walking on your ceiling anymore or pounding on the wall next door. Financially it may be a sound decision to purchase a home rather than rent. I am familiar with many reputable lenders in the Toledo area, that would be happy to discuss your ability to get a loan. Please give me a call for a list of them or visit my Preferred Partners page at Why continue to pay the landlords mortgage when you could be paying your own! Interest rates are the most attractive they have been in years. The selection of properties is tremendous in Toledo area. The Federal government is offering an unprecedented opportunity to 1st time home buyers. House prices are amazingly low. What are you waiting for? My area of expertise in the real estate market is working with 1st time home buyers and lower to moderatedly priced properties. Take the plunge, give me a call or send me an email and let's if we can't save you money and put you in a home of your own. There are options to consider and I would be happy to answer any of your questions to explore those options with you.
Connie Johns, Realtor®
The Danberry Company, Realtors
3555 Briarfield Blvd.
Maumee, Ohio 43537
cell: 419-349-4948
Serving the greater Toledo, Ohio area.
(The illustrated figures in this example are approximations and may vary due to interest rates, down payment, property taxes, purchase mortgage insurance, and homeowners insurance)
Originally posted at www.conniejohns.com
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