Rent vs buy?

[rx7gslse]

I figure some of you guys have done this before so I'll ask here anyway.... This board seems to have a fair amount of older intelligent people rather than just HS kids who haven't yet been thru this...

What are the real true advantages to buying a house vs renting one? I've gone thru all the little rent vs buy calculators and stuff, and they all say buy, even though it's about 300/month more out of pocket...

how much do you really get back in savings with taxes etc etc....

right now I'm paying 760 for a 900sq ft 2 bedroom apt with a 1 car attached garage.. I can buy a brand new 17-1800 sq ft house 3/2/2 for about 120k.

Within interest rates low it seems like a decent decision, but I'm looking for opinions from people who've been thru all of this before...

(to note, income tax in TX 0%, but property tax is about 3.5% and houses are going up between 7-9% a year in my area)

TIA!

 

[azeli73]

I can tell you this man. I am 29. My girlfriend and I have decided to buy a home and get out of the rental we are in. You just can't beat the rates right now. We put a bid in on a house built in 2001. 3 bed 2 bath for 130,000. Our payments to start will be about $800.

Everyone I know is either buying or refinancing. Jump on it while you still can. rates are at a low not seen in almost 40 years!

My only complaint is I'm not going to get the 18" wheels I've been eyeing... I'd rather have a home

 

[rx7gslse]

yeah... that's the major motivation for doing this right now....


interest rates canot be beat....

 

[GerardPRO5]

being 26 years old and having just bought my second home, I think I have enough clout to provide you with some good advice:

BUY a house.

depending on your income and what tax bracket you fall into (after pre-tax 401K, deductions, and other things you may wish to claim), more than likely, the interest from your house alone will give you a tremendous tax break versus not having a home, thereby guaranteeing a refund.

also, depending on how much you will give for a down payment, your monthly mortgage payment can be less than your monthly rent now!

pros of buying a house:

-building up equity
-you can do whatever you want to it
-no more landlord
-tax shelter

cons of buying a house:

-you're responsible for everything
-you'll finally understand why termites are so bad

if you think about it, if you rent a house, you're just throwing your money away because your money isn't working for you...if you pay a mortgage, part of your money is going towards interest, which you can benefit from come tax time.

wow. property values are pretty low in TX. here in Southern California, I just bought a 2 bedroom, 1.5 bath townhouse for almost $300K...and I thought it was a steal...considering it's in Irvine and it's 1200+ sq. ft.

I sold my previous property after two years and made a 100% gain on equity alone. I bought it at $96K, and two years later, sold it at $180K.

 

[mazdadan]

I agree with Gerard completely. Couldn't have said it better myself. I purchased a house and the benefits beat renting hands down....especially if you don't plan moving that often.

 

[rx7gslse]

yeah, homes in TX are very compeditivly priced.. Mostly because land is so cheap I suspect

here's the community I am looking at. Just beginning to be built on teh fringe of development in DFW, but since I work out there anyway, it's no big deal.
http://www.beazer.com/community/community.asp?LocationID=14&CommunityID=941

oh, and I'm 24.

So at current rates on a 120k loan I'll end up paying about 7k a year purely in interest... Which line does this com off of my income tax on? Last year I think I ended up paying right about that same amount for Federal income tax FYI.

 

[MP3TLH]

I'm saving up to buy a house too. I'm tired of throwing my money away each month. How much either % or $ did you cough up for your down payment?

 

[GerardPRO5]

for my first house, I took out an FHA home loan, which was only 2% down.

also, if you're prior service, don't forget about VA home loans.

for my second house, I used the cashout from the equity I built up for my down payment...

 

[cjstringer]

Buy. Not even a question. I'm actually pissed I didn't do it sooner. I started looking when the apartment we were considering was going to run $1150 a month. I found a houes twice the size of the apartment with a 2 car garage (WOOHOO!) for $230 less per month. No brainer. I used to get a couple hundred back a year in taxes, this year, doing nothing but buying a house in late 2001, I got almost $3500 back. Worth every penny, and I just refi'd about a month ago for 15 years @ 5.5%. Rates are getting under 5 now, so buy a house, on a fixed rate, and reap the rewards! You'll be amazed at how much owning a home does for you. Great experience all around.

 

[1sty]

I am lucky that my Parents allow me to dwell with them until I ave a substantial down payment. Plus I don't want to bother until I can live with my girlfriend so we can split the cost but she will be in College another 2 years so i have alot of time but don't want to throw away a down payment right now as I feel the cost of homes will drop for another year before the interest rate climb again.

 

[rx7gslse]

hmm... well at least it's not much of an arguement here...

I've been buying stock and saving for awhile, so I'll have plenty for a downpayment if I sell that (we went from 1.60 to over $6 in 3 months!!!) Still not 20% down by anymeans, but plenty for one of the "1st time homebuyer" programs...

ok, now I guess I should go talk to a couple banks....

 

[chuyler1]

When you rent, your money goes into a hole.
When you buy, you can sell what you have if you decide to move. Its a life long investment, the earlier you start the better off you are.

 

[chuyler1]

I am lucky that my Parents allow me to dwell with them until I ave a substantial down payment. Plus I don't want to bother until I can live with my girlfriend so we can split the cost but she will be in College another 2 years so i have alot of time but don't want to throw away a down payment right now as I feel the cost of homes will drop for another year before the interest rate climb again.

Dude, I'm in the same situation...my g/f is in grad school and I've got a computer job. She's living in an apt close to campus and I'm living with my folks saving money.

When she graduates and gets a job, we'll find a place thats convenient for the both of us. Prolly a condo at first, then a house.

 

[FuNwaGoN]

Well Just having had my taxes done I can tell you that the difference between owning a home and not owning a home got me back about $2k more in tax refund. I have just now actually as of march 1st owned my home for 1 year and I can say that I have never been happier. My rent was more than my mortgage and with the interest rates locked in this low (4.5%) I couldn't pass up the opportunity to be a homeowner. Some other fringe benefits of having a house are that you actually have something to deal with. Meaning Home Equity, this is not true for all homes but in my example I have approx $20K in equity from buying the home at discount (i know the person I bought from) and appreciation. Well I took that equity and bought my car with it. So I just have 1 payment a month and a better rate than any dealer would give me on a car. I will never rent again... that is for sure.

Also the joy of doing home improvements. I live by hgtv and tlc and like to do little projects like that around the house. Actually am taking some of that savings and putting it back into the house and yard to improve the value.

One suggestion I might add is this. Pay 13 payments a year. it cuts your 30 year mtg. down to 15 years. Well that is if you can. At least try and make a half an extra payment a year as that will still decrease the term of the loan greatly.

 

[1sty]

I could get a place now with her as her dad would contribute what he is paying in dorm costs to a morgage but I would rather be shot dead then live in Mass. no offense but I am not pissing away all that money in taxes. We want to move to the Va area when she graduates.

 

[big_ben]

Rates don't even matter. Here is the biggest reason to buy. IF you rent, you get ZERO of that money back. If you buy, you are guaranteed to get at least what you have paid if not more. The biggest thing with buying a house, try to pay at least 2% down. That's the only hard part about buying a house. The interest rates will be low like this for the next 6 months to a year. If you dont' have the money to put down yet, just lease for another 6months to save money then buy a house. Rental rates for nice appartments are CHEAP right now because everyone is buying houses.

 

[1sty]

Of coarse for us in the North East anything that isn't a shanty is almost $200K atleast $150K but constant bidders get that up in no time.

 

[big_ben]

That's true. We were shopping for a house but we decided to wit until I was graduated which will be in about a year and a half. We couldn't quite afford what we wanted and we didn't want to settle for something we didn't want. You can usually expect to pay a little under $1000 for every $100,000 it's worth. Actually with the rates so low, it's probably closer to the $900 side than $1000. But that's with the zero down VA loan that we were going to use. It all depends on what you put down.

 

[1sty]

I am hoping for $30K atleast

 

[ZoomZoom]

Yea, you have to buy for sure man. We bought a house about 4 years ago and we ended up paying about $8 a month less in our principle and interest payment than we were paying for rent. Granted, we bought a small house, it's 3 bedroom and 2 bath in about 1100 sq. ft. and has a 1.5 car detached garage. But it had also been completely redone recently and had a nice deck out back. Since then I have added a 12' x12" barn in the back and an addition to the deck which now holds a 6-7 person hot tub. All of this type of stuff adds to the value of the property and helps out when you try to resell. I will also suggest, that if you do buy, look at your payment and consider being able to pay 1/12th more than what it is. This will allow you to pay 1 extra payment a year and knock off possibly 7 years on a 30 note. Besides all that crap, just owning your own home is fun and gives you a feeling of pride and accomplishment. Good luck in whatever you decide.

peace
Griff