I have a lot of friends, family and clients asking what certain people could afford for what they pay now in rent. The beauty of my job is showing people how they can achieve the "American Dream" of homeownership for what they currently pay in rent.
My real estate calculator can help us through the process and I created an example of a looking for a home in Watertown, MA. I used the following criteria to figure out the Rent -> Buy calculation:
- 30-Year Loan Term
- 6.28% Interest Rate (Today's National Average)
- 10% Down Payment
- 11.39% Property Tax (Watertown's 2008 Property Tax Rate)
- .35% for the Home Insurance Rate
- 28% for the Tax Bracket (Check out this link to see your Tax Bracket)
- $1,250 for the Monthly Rent
Here is what I found through my calculations: Someone paying $1,250 a month with a 10% down would be able to afford approximately a $239,360 home. Yes! Homeownership is that possible. Your loan amount would be $215,424 with approximate payments of only $1,331 a month. So for a little under $100 more a month you can afford a great home in Watertown, MA.
A few more calculations, only changing the down payment percentage:
- 5% = $229,013 home amount
- 20% = $263,137 home amount
This means that most likely... YOU CAN AFFORD TO BUY THE HOME YOU ARE CURRENTLY RENTING.
For more information on calculating what you can afford to buy, please email me at mark@smarthomesboston.com
I'd love to show you the perks of home ownership and how you too can afford the American dream. Here is a great link to the New York Post which has a calculator to help you decide between buying or renting: New York Times: Buy vs Rent Calculator
Oh by the way... here are some of the homes you could potentially afford if you rent for $1,250 a month at 10% down:
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