Should I Buy A House? Should I Rent? | Lessons to Learn Part 2

 

Here is a quick recap of “Should I Buy A House: Part I”

  • If you are good/enjoy fixing things, then real-estate may be a great investment choice for you

  • Take into consideration ALL of the expenses of owning a home (taxes, insurance, repairs, etc.)

  • Be careful and ask a lot of questions during your home buying experience to ensure there are no unpleasant surprises

 

Why it may pay, to wait to buy your first home…

Interest Rates

We are currently in a rising interest rate environment, which means as rates move higher, so does the amount of money you will need to pay for a home you may be pursuing. Don’t let this keep you from going after the home of your dreams, but it may be a smart decision to hold off buying a home until you save up some more money

Private Mortgage Insurance

If you don’t put a lot of money down on your home purchase (20% or more), most likely you will be paying an additional amount each month called Private Mortgage Insurance. Even if it is only $50/month over 30 years, this costs you $18,000 that does not build up any “equity” in your home. This is just money you pay to your lender…

 

Average Rate of Return for Real-Estate vs. Stock Market

Now, they are two completely different kinds of investments, but according to Investopedia,

“A $100 investment in the average home in 1975 – as tracked by the House Price Index from the Federal Housing Finance Agency (FHFA) – would have grown to about $500 by 2013. A similar $100 investment in the S&P 500 over that time frame would have grown to approximately $1,600.”

Happy Slacking,

Joshua Krafchick, CRPC©, EA