Top 3 Reasons you should stop paying your landlord and buy a home...
By: http://www.billyo.com/
1.Build wealth for YOU, not your landlord.
First of all, your home will appreciate in value and I believe real estate is one of the best investments you will ever make. For example, if you buy a home or condo for $200,000 and it appreciates 5% per year, you will have built up approximately $50,000 equity in 5 years. Also, you need to consider your monetary return on the money you actually invest in the property. Let's say you put 3.5% down and closing costs are approximately $4,000, you would have made $39,000 on a $11,000 investment-what a return! Obviously, there are other costs such as repairs and upkeep that you must subtract from the equation but you get the picture.
2. Tax Deduction Baby!
Secondly, the interest and real estate tax portion of your mortgage payment will be tax deductible which will give you a lower after-tax payment. Also, PMI is now tax deductible for new homeowners with adjusted gross income of $100,000 or less. Consult your accountant to determine your tax benefits.
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If you plan on renting a 1 bedroom condo for $1,200 month you could buy a $200,000 condo with 3.5% down payment and pay a monthy payment of $1,422 but you will save $335 per month on taxes, interest, and PMI so your payment will be $1,087 on an after-tax basis which is $113 lower than renting apartment. Don't you figure out your budget with net pay not gross pay..right? Get the idea! Also, if you feel the new payment is a little too high, you may want to take less federal taxes out of your paycheck so you can make the monthly payment more affordable since you will be getting a bigger tax deduction at the end of the year. Try some first home buy calculations on your own to see if home ownership is right for you. Finally, don't forget you will be building up wealth through appreciation in value.
3. There is no place like home...
Finally, there is nothing like owning your own home. I started out as a renter, and the thought came to me one day "why am I paying thousands of dollars in rent?" I bought a condo in West Hollywood and lived there for five years, built up tons of equity, and then moved to a 3-unit building and I became a landlord and collected rents from other people. Today, I live in a beautiful single family home and have my own backyard, garden and garage and nobody tells me what to do. Is this what you want? You need to start somewhere, and buying a moderately priced condo or starter home might be your best bet, but please stop paying your landlord and get pre-approved while the $$$ is still cheap.
ONWARD!
-Billy O'
