When you’re renting your Tamaqua home, what are you paying for?

If you’ve been waiting to purchase your own home until:

• Prices take a dip
• You can afford a move-in-ready dream home

  ...You might want to stop and think about what you’re paying for each month when you pay your rent.

Unless your landlord inherited the house, has had it so long that it’s been paid off, or purchased with all cash, you’re paying the landlord’s mortgage payment. But that’s not all.

You’re also paying for:

• Property taxes, which may be higher since the house isn’t owner-occupied
• Casualty insurance, which only covers the structure, the fixtures, and the owner’s liability - not your personal possessions
• A fund that pays for maintenance, repairs, and loss of income during vacancies
• In some cases – a rental manager
• A bit of cash flow (profit) for the owner

  As a homeowner, you’ll pay for taxes and insurance, and if you’re wise you’ll put money aside for maintenance and repairs. However, you won’t be paying a rental manager or adding to a landlord’s cash flow.

  

In addition, you’ll be gaining a bit of equity with each payment. When you pay rent, all you gain is a roof over your heads. Oh – and some rules to follow.

Meanwhile, there’s nothing going on in the economy that’s apt to trigger a new loss in housing values. What IS going on is apt to cause interest rates to rise – and if that happens, the cost of housing will rise even if prices don’t budge one dollar.

Consider this:

• At 4% over a 30 year mortgage, the principal and interest payment on $100,000 is $477.42.
• At 5%, the payment is $536.82

  That’s a difference of $59.40 per $100,000.

To look at it from another angle, if you purchase a house with a $300,000 mortgage at 4%, your monthly principal and interest payment will be $1,432.25.

At 5%, that $1,432.25 will only get you a $266,801.85 mortgage loan.

 

If you’re moving to another city in the near future, it’s wise to continue renting. If you plan to stay right here in Tamaqua, it’s wise to consider purchasing, even if it means buying a smaller or less elegant home than you’d like.

 

The equity you’d build in a few years could give you a strong boost toward ownership of that dream home.

 

Think about that...