Last of the series, we going to talk about the cost of living in a house. Renting is an expense and is likely to increase over time. Buying a house is one investment that over time will pay off big once you have paid down the debt.
If you get a fixed rate mortgage at least the cost of ownership would stay the same while you live there and if you get an FHA loan (about 80% do right now) the loan is assumable by the next buyer so they can really benefit from the lower rate you got now.
One more thing, human nature being what it is, owning a home is a bit of a ‘forced’ savings plan. Owners have a much higher net worth than renters. The actual cost of owning and renting may be about the same right now in our market and some would argue that renting is cheaper and if you invest the difference it is a better idea but that relies on math and not human nature. That higher net worth that owner have over renters is a real number and the reason is they are ‘forced’ to make a payment some of which includes a principle reduction, thereby increasing their net worth. The renter most of the time fails to invest the difference anyway. It ‘s just the way we are.
Even with the collapse of the housing market a few years ago, the investment of owning real estate is huge.
Click on the chart to see the numbers but if you invested in any of the stock indexes in 2000, the same investment in real estate would have produced a lot more return. Yes, even with the collapse of the market in 2007. If you want to know more about investing in real estate or owning a home, give me a call. Now, here is an article on the idea of renting vs buying.
Thanks for listening,
PS: We can help anyone move anywhere. If you know someone that could use our services please just introduce us. We’ll take great care of them.
- Charlie Peacock – you gotta hear this guy
- Living with lions – great video