Whose mortgage do you want to be paying, anyway?
“Should you keep renting, or should you finally buy?” It may seem like a loaded question. After all, we’re in real estate and want you to buy. However, we also want what is best for you and your situation.
The No. 1 thing we always say when confronted with this question is: when you are paying for housing, whose mortgage do you want to be paying for, yours or your landlord’s? The fact is that, no matter what, you’re going to be paying on a mortgage. The only question is whose you’re paying. You might be leery of paying a rate as high as 6.5% or 7%, but the truth is that when you’re renting, you’re basically paying 100% interest.
The other concern is that interest rates have made the payments on a home unaffordable. Well, we crunched the numbers, and this is what we found. Back in April, with those super low rates of 4.5%, people had to overbid by a lot to get a home. That means they were paying a much higher principal than they would today. In this market, sellers are coming down from their list price, so even if you were to pay a higher interest rate, you’re getting a break on the purchase price. When you factor in everything, at the end of the day, your payment isn’t much higher. Using a $450,000 list price and some very reasonable assumptions, we found that the difference was only around $15. That’s not even considering the difference in the down payment.
That’s why we feel it always makes more sense for someone to buy. Remember that if you’re paying on a mortgage, it might as well be your own. You could be building wealth for yourself rather than some landlord.
If you want to discuss what buying a home would look like for you, then give us a call. We’re here to be a resource for you.
