Should I Buy?

By
Real Estate Agent with Real Estate America

If you decide to buy, you will have added costs and responsibilities.

1. The cost of Home Owners Insurance, mine $60 per month.

2. Water/Sewer/Garbage another $60 per month.

3. Property Taxes, mine $200 per month.

4. You will have interest charges on your loan amount, mine $1140 per month.

None of the above costs reduce the Principle amount I owe on the Home.

Plus, anything breaks down, its your financial responsibility.

The above costs add up to $1460 per month. With ZERO, going toward reducing the Principle amount I owe.

How much is your current rent in Sacramento?

Try this, from your income take $1460 every month. Pay rent and put the rest in the bank for 1 year. If in that 1 year you never touched the  money in the bank, that ca be a good sign.

Comments (2)

Joseph Lang
Pillar To Post Professional Home Inspection - Rancho Cucamonga, CA
Home Inspector, Southern California

Your view has some flaws. Buying a house is a long term commitment, unless you're an investor.

With rent, no matter when you move, you have lost every penny you've ever put into it. With rent, your credit score does not get improved. With rent, you have no control as to what happens around you (for the most part). There are really not too many advatages of renting.

Try putting money in the bank for one year. The interest is so amazingly low, most banks don't even pay 1%. So if you invested $1,000 per month, you wouldn't even earn $120 in one year.

However a house is a long term commitment. Let's say you live there for 3 years. My friend just moved from Texas after 3 years, a totally different market from California, and made $30,000.  That's a modest amount of equity for 3 years, especially in California. But that $30,000 blows away anything you could possibly make at a bank.  Even if you didn't pay down the principle, you still made $30,000.  The most you could have made at a bank would be maybe $500, because remember the money you put into the bank is yours already, you can't count that as money made.

I would always recommend buying a house. Though the values may be steady, or even falling right now, in th long run when prices rise again, which they certanily will, you will have money in equity in the house even if you don't pay down the principle.

Plus, if you don't buy now, you'll have to buy later when prices are higher and all those fees you just mentioned will have gone up even higher. So you'll either pay them now or later, unless you plan on renting forever.

If you can afford it, I hope you buy a house soon.  Rates are low, selection is great and sellers are willing to negotiate on price.

Good luck to you.

Oct 11, 2007 11:36 AM
Mike and Dawn Lewis
The Lewis Team at Keller Williams - San Diego, CA
The Lewis Team at Keller Williams in San Diego CA

Michael,

What's up Leatherneck - Oraaah. I like the uniform shot. I was in the Corps from 1984 - 1988. Good to see you in real estate. Good post. Keep on posting and I'm looking forward to reading your next posts.

Mike Lewis 

Oct 11, 2007 06:03 PM