If you are a renter wondering when you will ever be able to own a home, I have good news for you- the time is now. Between a large inventory of homes and interest rates still low, you can buy a house you could not afford for the last few years for a reasonable price. If you do your due diligence (research), you may be able to find a home that needs what we refer to in the industry as, lipstick or minor repairs. Repairs such as paint, carpet, minor upgrades and a good cleaning, can take thousands off of the asking price. A low purchase price coupled with sweat equity(doing the work yourself and saving thousands) can get you into your fist home for a payment that you can afford (your current rental payment). The benefits are endless but summed up with, the savings of the tax benefit and the pride of owning your first home. Oh and by the way when the market turns around you can sell for a profit. Below is a chart designed to help you see the difference between renting at $1500/month vs. owning a $300,000 home for 5 years with a mortgage payment, including taxes, of $1,995/month.

Buying Analysis
Based on the information provided for a 5 year period:
You will pay a monthly PI (Principal and Interest) payment of: $1,995.00
You will gain a tax advantage of: $28,601.00
You will gain an equity appreciation of: $38,892.00
Totaling a net value gain of: $67,494.00
Selling the home in 5 years will incur closing costs of: ($9,936.00)
Giving you a total net benefit of ownership of: $57,557.00

Rental Analysis
Based on the information provided for a 5 year period:
If you chose to buy you would have paid home buying expenses of: $119,754.00
You will pay rental expenses of: ($98,393.00)
Giving a difference of: $21,360.00
Investing the average yearly difference of $4,272.00 for 5 years at %8 yields: $27,067.00

Final Analysis
Because your Total Benefit of Ownership of $57,557.00 is GREATER than your investment yield of $27,067.00, it would be in your best interest to BUY this home rather than to RENT it.
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The results shown above should be used only for informational purposes. The accuracy of these results is not guaranteed. If you seek additional help or explanation, please refer to your loan officer.

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