Any realtors out there....or real estate savvy individuals

EmilyRanae22

Hello All!
I am going to be moving in about 4 months and trying to get everything planned out. Where I'm moving it seems that it would cost the same, if not less, the purchase rather than rent. My problem is, what hidden costs am I not considering?

Does anyone know any ways to calculate what it would cost to live in a certain house/area? I hear that taxes are often what new home owners don't consider. When I've rented I've never had to pay for water or trash so that's something else I'll have to consider. Any suggestions would be greatly appreciated!
Thanks!

blushingmama

taxes
HOA (home owners association fees)
home owners insurance

those fees would normally be added into your mortgage payment

all the utilities
when something breaks - you're on the spot to fix it.
maintenance


but you'd also get to deduct the mortgage interest off your taxes. at least for the time being .

SueGremlin

Property taxes can be a substantial portion of your mortgage payment.
Also find out if you will have to pay PMI to your mortgage company. That's an insurance you pay for a period of time if you don't put a certain amount of money down on the mortgage up front.
Association fees for a condo are also a big thing to consider.
The market in the area (are prices static? Lower than 5 years ago? Higher? Are houses selling?)
Homeowner's insurance is generally not too bad, but also something to ask about.

EmilyRanae22

I didn't realize that insurance and HOA would probably be part of the mortgage, i like that....the fewer payments the better!

ArroganceInStep

I've never heard of a place where renting was more than buying, as if it were people with money would snatch up the properties and rent them out. That being said renting you don't have anything to show for the money you paid other than the temporary place to stay. Buying is an investment.

EmilyRanae22

I've never heard of a place where renting was more than buying, as if it were people with money would snatch up the properties and rent them out. That being said renting you don't have anything to show for the money you paid other than the temporary place to stay. Buying is an investment.

My brother rents a house for 1,300, according to zillow, a very similar house in the same area has an estimated mortgage payment of $600. That's why I'm saying it SEEMS to be cheaper to purchase. I'm wondering what I am missing here....I know there are a lot more expenses associated with owning but it seems like it would be about comprable to renting a very similar house.

ArroganceInStep

What does he get with rent? Does that include heat? Hot water? Trash? That $600 mortgage payment doesn't include those things, and probably doesn't include taxes or HOA or whatever on top of that (which were already mentioned). It also takes into account a pretty sizeable downpayment that was likely required to purchase the home.

I wasn't clear initially, I haven't heard of a place where the total cost of renting was more than the total cost of buying.

ktfitzgerald

I'm buying a new home right now due to divorce and I can definitely afford to buy a much nicer place than I could rent (So thankful for low interest rates!!!). I went to a great mortgage agent and went over the numbers with him. He figured out all the tax, hoa and insurance costs for houses I was considering and was able to estimate a monthly payment that he gaurantees will be accurate within $50.

So my suggestion is to meet with a mortgage company or broker and talk about the numbers. It made all the difference for me. Good luck!!!!!

neverstray

Ok, for many years now, it's better to rent than own. There are lots of online calculators on this. I've been a strong proponent of renting vs owning. Owning is not all its cracked up to be. I've owned homes and rental property and I think it sucks. You can innvest your money elsewhere and rent. When something goes wrong, they have to fix it. You don't have to pay property tax, you're paying it in the rent already. If you find an old place to rent, like where the house is paid off, the owners may not care that much about you paying all the expenses. In other words, property taxes are low because the property was purchased 40 years ago, there are no mortgage payment, etc, so the owners can literally rent it for a few hundred a month, if they want and that pays for the cost of keeping it maintained.

If you want to buy, there is insurance. Where I live, there earthquake, flood, and fire that are mandatory. You can't not have it and it costs a lot; especially flood and earthquake. You might have PMI if you don't have a good down payment. Avoid PMI at all costs. It is a total bullsh*t expense.

Never have thing wrapped up in your mortgage. Always have everything separated so later you can pay them off or get it of them. Wrapping things into the mortgage seems simple, but it's a rip off every time. Remember, NEVER go for the seemingly easier way. Your mortgage goes on for 30 years. So, what ever you sign will stick for 30 years. Your payment being as low as it can be is the most important thing for you. Your mortgage payment being as high as it can be is more important to the bank. So, there the devil. Watch out!

Stay out of HOA if you can. No one likes them, they can be significant, and they are mostly run by jerk offs with nothing better to do with their lives except makes rules for everyone else. Total idiots, and control freaks.

Put as much down as you can. 20% or higher.

The tax deduction is a myth. It's not the reason to buy. If you think so, give me a dollar everyday, and I'll hand you back $.60. Deal?

The only reason to buy is not to invest. A house is not an investment, as weve al recently learned with everyone losing their homes, it is a home. A place to live. Plan on staying for the long term. I think the way people do it today is crazy and that's why so many lost their *kitten*. It's your home, not an investment. Eventually, yes, it will be a nest egg and you may need it in your old age. However, too many times, I see oldies having to sell it for medical. Guess what, if you don't have it, you get treatment anyway.

Buy a home, live in it, retire, and be happy. Forget about the financial aspect of it. That should not be the reason for buying it. You are not speculating on the market. It's a bad decision to do so, IMO.

apponly

I've never heard of a place where renting was more than buying, as if it were people with money would snatch up the properties and rent them out. That being said renting you don't have anything to show for the money you paid other than the temporary place to stay. Buying is an investment.

My brother rents a house for 1,300, according to zillow, a very similar house in the same area has an estimated mortgage payment of $600. That's why I'm saying it SEEMS to be cheaper to purchase. I'm wondering what I am missing here....I know there are a lot more expenses associated with owning but it seems like it would be about comprable to renting a very similar house.

There's some Rent vs Buy comparison tools out there, though it's generally skewed to provide an incentive for you to get a mortgage. In most cases of properties located within stable markets, it's usually a wise investment to buy instead of rent.

Some things to consider:

Condo association dues will also provide for the minimum requirement of the building's exterior insurance (you're responsible for your own contents coverage insurance) and some monthly planned developments association's dues will also often include your water & sewer fees and/or monthly basic cable in some areas.

My suggestion is to carefully examine the market values and stability of the area. Consider the local 2012 taxable values that should be released Nov 1st vs the recent history to determine the rate of decline if applicable, and find out if the property you want to purchase is still considered to be in a Distressed or Declining Market area. Most lenders would be happy to provide the information.

Distressed/Declining market properties have lost much more in their equity and value than what the rental cost would have been in the last 4 years. If it continues to decline in the area you seek, then you could be looking at ongoing losses of your initial downpayment equity should you find yourself in the situation where you need to sell before the market recovers.

Of course, if the market is stable in the area you desire, or if you expect you'll stay in your home for a very long time, then you'd probably be better off buying the home. You can ask a mortgage lender professional to help you determine the period of a rent vs buy "break-even" point for your investment of equity downpayment and the expected closing costs in the area you wish to live.

blushingmama

zillow is a fun app but often out of date

in my mind a house payment is a house payment, either write the check to the bank or to a landlord. maybe because 6 years ago my house was worth double the amount is it today

apponly

zillow is a fun app but often out of date

in my mind a house payment is a house payment, either write the check to the bank or to a landlord. maybe because 6 years ago my house was worth double the amount is it today

yea sometimes I wonder if the rental rates are being driven up because the investment property owners are trying to recapture their losses in our area, along with the foreclosured and upside down equity walk-away people suddenly finding themselves scrambling to find suitable rentals.

Always remember a few things: Sellers/Realtors and Mortgage professionals benefit if they can convince you that the property is worth more than it really is in the current market. Sellers get the proceeds, Realtors are paid based on the Sales Price, and Mortgage Professionals benefit from higher mortgage amounts based on the sales price. Sharp buyers look for the proof of reality of the market, not just accepting what these people tell them.

Do your research on the property area and keep in mind your long term investment when considering the rent vs buy scenario. The monthly expense comparisons are great for personal budgeting purposes, but they may not have as much impact on your long-term financial security.

blushingmama

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Always remember a few things: Sellers/Realtors and Mortgage professionals benefit if they can convince you that the property is worth more than it really is in the current market. Sellers get the proceeds, Realtors are paid based on the Sales Price, and Mortgage Professionals benefit from higher mortgage amounts based on the sales price. Sharp buyers look for the proof of reality of the market, not just accepting what these people tell them.
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^^^^^
truth right there!!!

neverstray

Still want to buy a house?

LOL.