Re: How Long Will You Need to Save to Buy a Home In Your City?
by greghinch on Wednesday August 29, 2012 @10:39AM
(#4448743)
I see how you're doing the math, but I think you're presenting it misleadingly to say your monthly cost is $1400+$1000. First of all you left off the $600 principal; you may recoup that in a sale but you still gotta pony it up every month. Second, your $2000 a month mortgage payment seems low on a $500k home. Talking to realtors and friends that have bought, the rule I've been told to go by is plan $700-$800 per $100k for mortgage and property taxes (not including any HOA). So that means a cost of $3500-4000 PLUS HOA dues every month. Even if you are offsetting $1000 of that with tax benefits, renting for $3k still looks attractive, especially if you factor in the cost of maintenance of a period of 10 years or more. Between two homes I've rented I've not had my rent increased once by a landlord in the past 6 years.
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Re: How Long Will You Need to Save to Buy a Home In Your City?
by rayiner on Wednesday August 29, 2012 @01:44PM
(#4449971)
It's not misleading, it's accurate. Your principal payment is money you'll get back on sale (or can borrow from if you need liquidity). It's qualitatively different than interest or a rent payment that you'll never get back.
My number is roughly in line with the $700/100k figure. I'm assuming 20% down, so the loan is for $400k. If your credit is excellent, and you don't live in one of the high-tax areas, $2000 loan payment + $500 taxes is doable.
As for rent increases, I've never not had a rent increase in 8 years of renting in Chicago and Atlanta. It's standard practice in the city.
Re: How Long Will You Need to Save to Buy a Home In Your City?
by greghinch on Wednesday August 29, 2012 @02:42PM
(#4450329)
Well it does matter from a practical sense in that you'll need to write checks for $2500 a month (plus HOA). You may recoup $5000 or so in tax relief at the end of the year, but you still had to come up with that money in the first place (let alone save up $100,000 which is no mean feat, even if you're making a low six figure salary like a lot of professionals in their late 20s/early-mid 30s).
I guess my bottom line with my original comment was, I can think of a lot better uses for the money, time, and effort it takes to buy a $500,000 condo, and to me the returns in my quality of life vastly outweigh any sort of long-term security you might feel from owning a home
Re: How Long Will You Need to Save to Buy a Home In Your City?
by salsashark on Wednesday August 29, 2012 @03:02PM
(#4450431)
Don't forget the cost of improvements and remodeling for a home you own? Home owners will probably need to update at least the bathrooms and kitchens before they sell, which can be an investment of >$20k. Not to mention the costs of repair, which you don't take on in a rental...