The shortage of rentals in our area has caused rental rates to rise. It’s a simple fact of supply and demand. As those rental rates rise, the difference in cost between renting and owning a home gets closer and closer.
If we go back to 2012, any purchase was probably a sound financial decision. We are again close to the same set of circumstances.
Let’s face facts. When you are a tenant, at the end of the year you have a pile of cancelled checks. When you are a homeowner, at the end of the year you have hopefully build up equity. You can also deduct your mortgage interest and your real estate taxes from your income saving even more. Will you also find quite often the mortgage payment combined with taxes is less than the rental rate for a similar home.
Here’s an example. A typical 3-bedroom house in Howell will rent for approximately $2,200 per month. A similar home in Howell would sell for around $250,000.
To purchase this home with a minimum down payment of 5% would be a mortgage of $237,500. The mortgage payment would be at today’s rates $1,168. You would also have mortgage insurance premium of about $120 and your taxes would be approximately $500 – $600 per month.
The math tells me that you could buy this house for a mortgage payment of under $2,000 per month including taxes. This is not taking into account the tax savings. And him can you put a price on the satisfaction of owning your own home?
So before you sign your renewal on your lease, speak with your Realtor