#1. ARE YOU MAKING THE RIGHT DECISION?
COMPARING RENTING TO OWNING: 3/2 Apartment vs. 3/2 Home with 3.5% Down on FHA Loan
RENT: $1500/mo
Tax Benefit $0
$200,000 Home with 3.5% Down at 4.75%
|
P&I
|
$1017
|
Interest averages about $76/mo. over first 2 years
|
|
Insurance
|
$50
|
Estimated, but should be pretty close
|
|
Taxes
|
$200
|
A little high for Cobb, Gwinnett & outlying counties...could be a little low for Fulton & Dekalb
|
|
MI
|
$187
|
|
|
PITI&MI
|
$1454
|
Total Payment
|
Tax Benefit: Currently, MI is deductible. If I include that in the tax benefits the total monthly tax deductible amount is:
$760 + $200 + $187 = $1147/month
Assuming a combined tax bracket of 30% (federal and stated), that’s worth $344/month
$1454 - $344 = $1110
Even if MI is not deductible (because it phases out for incomes over certain levels) the tax deductible amount is:
$760 + $200 - $960
Again, using a 30% tax bracket, that’s worth $288/month
$1454 - $288 = $1166
No matter how you slice it, the cost of ownership in these two scenarios clearly points to the benefits of owning. And if a renter wanted to just maintain the current level of monthly outflow for housing they could afford even more. As food for thought, do you think rent rates will be higher in 5 years? 10 years? If we get into an inflationary environment rent could really go up. But if you buy, you put a stake in the sand and your payments won’t change nearly as much.
#2. CHECK YOUR CREDIT….RIGHT NOW! You can get a free credit report annually at www.annualcreditreport.com. Make sure everything on the report is actually yours…not a relative or someone else with the same name. Information can get crossed up and it can take months (literally) to get it cleared up. Little things like disputing an account can keep you from getting a loan approval. All disputes should be resolved or removed in preparation of obtaining an approved mortgage.
#3. MANAGE YOUR BANK ACCOUNTS (statements)…..prior to applying for a mortgage. Lenders will pull 2 months worth of bank statements and there are some dos and don’ts that could make the process easier.
#4. HOW MUCH HOUSE CAN YOU AFFORD? The real question is how much house can you qualify for? Not an easy answer…but you need to know!
The four above elements to obtain your first mortgage are very critical. Element #1. Is self explanatory…it’s time to buy a home. Elements #2, 3, and 4 can be supported and answered more accurately through our Preferred Lending Partner. This is a no cost service and you are not obligated to use Beechler Realty Group for your real estate purchase.
Should you like additional help, drop us an e-mail
