Flagler Coastal Properties

If you think it costs a lot of money to buy home consider what it costs not to by a home.

Did you know that costs of renting a home typically increases by 3% a year? That means that an apartment or house that rents for $1,000 a month today will rent for $1,300 a month in ten years.

But here is the scary part, if you rent that home for ten years, the total amount you would have paid for rent is $137,567! That’s money you will never see again.

Home ownership on the other hand has tax advantages over renting, and those advantages can help you save money.

Let’s consider what would happen if you purchased a home for $150,000 (plus closing costs –expenses incurred during the transaction of purchasing a home), but with no down payment! Let’s say you would finance the home with loan, at say 7% interest. Your monthly payment would be $997 per month (plus property tax and insurance). Let’s take a closer look:

Monthly Mortgage & Tax Payments

Tax advantages are not the only benefits of home ownership. Here are a few ways home ownership can help you build wealth:

First there is something called amortization. Very simply amortization is gradual payoff of your mortgage. In ten years, making only the minimum loan payment your mortgage balance would have been reduced to $128,222. The other $21,778 is called equity and it is part of your new found wealth.

Next there is appreciation. Like the stock market, housing prices do fluctuate but over the long run cost of housing typically goes up. According to the National Association of Realtors home values rise an average of 4.5 percent per year. If that holds true, in ten years your $150,000 home will be worth $232,945. That is an increase in value of $82,945!

Now lets compare the home owner to the renter ten years from now.

The renter has spent $137,567 on housing but has nothing to show for it. The homeowner has spent slightly more on a home loan, property tax and insurance. But at the same time the homeowner has also earned $104,723 in equity. The homeowner has actually created wealth simply by owning their home rather than renting! This is wealth the homeowner can use to buy a larger home, save for retirement or apply to a child’s college fund.

When is the right time to buy a home?

There are two reasons that the time to buy is now.  First, there is no reason to continue helping your landlord build wealth every month you wait to buy a home is another month's rent you will never get back and another month you don't benefit from home ownership.  Second, 2009 has been one of those rare years when real estate prices actually went down.  Now the availability of recently foreclosed properties means homes today are more affordable than ever.  But it won't last it never does.  Take advantage of it while you can.

Buying a first home can seem intimidating, with the help of an experienced professional it doesn't have to be.  When you are ready to make the best financial invest of your life, let me guide you through the process.  Contact me today.

I respect you desire to lease rather than buy at this time but....

If you don't mind me saying so the reason to do so it ought to be because you want time in the area to look around and find just the right home or because your future plans are uncertain. It should not be because you don't know if the housing slump has bottomed out yet. No one ever knows the answer to that until prices start rising again. No bell is going to ring indicating the bottom. This is not the first down market I ever worked in and you would be surprised how quickly the recovery can sneak up on you. You also need to consider interest rates. Mortgage interest rates are at historic lows. On a $200,000 mortgage just a 1% increase in your mortgage interest rate equals an additional $131.50/ month or $47,340 over the life of the loan! That also does not take into account the tax and other financial benefits of home ownership.