We could have an entire post on renting vs buying – arguments can be made for both sides depending on your lifestyle, how long you plan to live in an area and a slew of other issues. This post is geared toward those that have weighed their options and would like to own a home but just aren’t sure if they can afford the monthly payments and a down payment.
Let’s look at a couple of examples:
You live in a two bedroom apartment that you share with a roommate, each paying $1,000 a month for rent.
A $275,000 property with 3% down and a 4.95% interest rate would require a down payment of $8,250, monthly payments of approximately $1,937 including taxes (estimated $2,700 annually), insurance (estimated $800 annually) and PMI (private mortgage insurance required for loans with less than 20% down).*
You are paying $1,250 a month for a one bedroom apartment.
A $150,000 property with 3% down and a 4.95% interest rate would require a down payment of $4,500, monthly payments of approximately $1,114 including taxes (estimated $1,800 annually), insurance (estimated $800 annual premium) and PMI.*
Check out this Rent vs Buy Calculator from Loan Depot
The above examples are just that, examples to give you an idea what kind of payments might look like. Caliber Mortgage has a great online payment calculator that allows you to change down payment, purchase price etc. and see what the monthly mortgage payment would look like – it even breaks everything down. The next step is to talk with a mortgage consultant. This is a very important step and I will talk more about what to expect and how they can help you in the process of buying a home next week.
If you’re thinking of buying, call, text or email. We can talk about what you’re interested in and if the time is right for you to buy. If not, we can come up with a plan for the future!
All the best,
*The results displayed above are only estimates and cannot be used to determine actual loan cost or be used as a guarantee. Please consult your loan consultant for an official estimate.