Now that I am nearly finished with a car build that I have been working on for a few years, I am focusing more attention on purchasing a house or condo.
There are a few reasons that I would like to buy a house this year.
The first reason is that it will save money long-term in comparison to renting. I have heard counter-arguments to this, and the woes of homeownership costing huge amounts of money: roof leaks, plumbing repairs, etc. However, it is hard to quantify the cost of home repairs a place would need before purchasing.
However, let’s take a look at potential costs of home ownership versus renting. Say you pay $600 a month in rent. That’s $5000 a year. That is relatively flat, with no home repairs needed.
Okay, let’s compare this to home ownership. Your mortage is $600 a month. You have to pay a plumber $700 once, and you pay additional taxes.
Maybe your grand total is $7,000 a year, and you have to pay an additional $2,500 in property taxes.
So that’s $9,500 vs. $5000 if the math is right. Ok, so it looks like renting is winning. But let’s consider the fact that your $5000 goes to the landlord and is not invested in any way. It basically just goes out the window.
The house on the other hand, you get to recoup some of the money spent.
I ran a projection for a 15 year loan on a house.
Frankly it doesn’t seem worth it unless a very substantial down payment is made. Over 15 years with a ~5% interest rate, you could be paying almost double what the house is worth.