There’s more to comparing the costs of renting and owning than the dollar cost of payments

Renting_200K

Even with numbers like these, some still say renting is better:

“Investing in a home is riskier than renting.”

No risk, no reward. Besides, even studies conducted by the Federal Reserve show that owning can provide a net worth that is from several to hundreds of times higher than that of renters.

“Home values have dropped in recent years.”

Which is one reason why ownership may now be less expensive than renting. As well, recent price trends in many areas have reversed, and values are once again on the rise.

“The tax deductions aren’t worth it.”

Some people benefit from claiming deductions for mortgage interest and real estate taxes. Others find a standard deduction more valuable. Even if you exclude the tax benefit, the real cost of owning can still be less than renting.

Equity for you or equity for your landlord?

With more or less equal payments, owning will always have an advantage in that you’re paying down principal and earning equity in your own home rather than the landlord’s.

Still renting and want to explore the path to ownership? Reach out, and I’ll be happy to help.

Factors used: $200,000 purchase price, 20% down, $160,000 30 yr. fixed loan at 4%/4.25% APR. Principal & Interest payment = $763.86, taxes = $250/Mo. (1.5% of value), insurance = $50/Mo., and maintenance = $168/Mo. (1% of value). Tax deductibility at 28%. Tax savings, principal paid and appreciation averaged over a 5-year period. Always consult with your tax advisor for tax advice specific to your situation. This is not a Good Faith Estimate nor an offer to lend. Rates, prices, taxes, insurance, etc., are subject to change at any time. APR calculations are based on closing costs of 3% of the loan amount. Actual fees can be less. 

 

Sincerely,

Rich Bersani

Greentree Mortgage, L.P.
Vice President
NMLS #133243
(856) 889-8648
RBersani@GreentreeMortgage.com

Advertisements

Rebuilding Credit: It’s Not Too Late

It’s true, negative credit items can remain on your credit report for up to 7 years (up to 10 years for public records, such as a bankruptcy, tax lien or judgment). But this doesn’t mean that you have to wait 7 to 10 years to begin reestablishing a good credit rating. Because credit scoring models typically lend more weight to your recent activity than to the mistakes you’ve made in the past, you can change your habits right now and begin reestablishing yourself as a good credit risk for a purchase or refinance loan in just 6 to 12 months.The following are a few Dos and Don’ts when it comes to rebuilding your credit:1) Three months prior to securing your mortgage, DON’T apply for, close, or pay off any collections, charge-offs, loans, or other kinds of credit without speaking to your mortgage professional first. Any one of these actions, as innocent as they might seem, could seriously affect your credit score, adding significant costs to your mortgage should your score suddenly drop.

2) If you have any credit card accounts with excellent credit histories, DO use them – but use them strategically. Keep your balances below 30% of their limits for 3-6 months prior to entering into a loan transaction, and use them only for small purchases that you can easily pay off completely at the end of the month. Remember, creditors like to see evidence of stability, so the goal is to keep the good reports coming month to month without falling into the same financial traps that led to credit challenges in the past.

3) If you don’t have a credit card, DO get a secured card immediately. This is a great way to rebuild or establish credit quickly. Because this account is secured by funds that you deposit (typically between $100 and $400) you’re not seen as a great risk to the card issuer because of your initial investment. Again, use this card strategically to build a strong credit history. Pay your bill on time every month, and it won’t be long before you qualify for an unsecured credit account.

For some, opening a credit account with a co-signer could be a better alternative, but it’s important to note that both you and your co-signer are equally responsible for any activity on this type of account, good or bad, so this strategy could backfire in the end if you or your co-signer makes poor decisions. DON’T mistake “authorized user” for a co-signed account. While, in the past, becoming an authorized user on an account in good standing would benefit everyone on the account, the credit bureaus have reconsidered this practice, and new credit models have all but eliminated “piggybacking” your way to good credit.

Give me a call at your convenience. I will be glad to help you in any way I can!

© 2013 Vantage Production, LLC. All rights reserved.

What Opportunities Have You Missed?

Buying Stock in Apple Computer for less than $10 per share.

Buying up farmland during the Great Depression.

Building a website to connect your friends before some kid from Harvard did it first.

 

“I was seldom able to see an opportunity until it had ceased to be one.” – Mark Twain

The world is full of opportunities missed. Funny thing is, at the time they were readily available or begging for attention, no one seemed to care. Those who actually took action were often dismissed as crazy.

What opportunities have you missed recently? With uncertainty and negative sentiment surrounding the real estate market for several years, some recognized opportunity and secured very good deals. Now, the market has undergone a fundamental shift. Home prices are rising, and many sellers are again in the driver’s seat.

There’s still time to act. If you feel safer taking action only once the direction of the market has been established, then that time has come. Buying when values are rising can add great comfort and peace of mind to the process.

There’s still time to choose.  We all need a place to live and we usually have just two choices – to rent or own.  Over the long haul, owning has proved to be one of the most fruitful paths to prosperity.  Renting has done the same – for the landlord!

Still, the choice is yours.  If you’re ready to seize the moment and secure your future now, opportunity looms large.  A home purchase may not make you tomorrow’s next multi-billionaire but it can do wonders for your pride, long term prosperity, comfort and stability.

Call me today to discuss opportunities the housing market may hold for you!