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re: Every time I passed on a real estate purchase because the price was too high...
Posted on 10/12/23 at 11:07 am to sidewalkside
Posted on 10/12/23 at 11:07 am to sidewalkside
quote:
throwing money away on rent
The median home price in my ZIP is $450,000. With 3.5% down, and all the various other payments, the monthly payment would be something like $3,300/month.
My rent is $1,800/month.
I take that difference and stick it in high-yield savings.
1
Posted on 10/12/23 at 11:45 am to GetCocky11
That $3300/mo comes with tax deductions of ~500/mo for income tax on mortgage interest at 7.45% mortgage if you're in 20% income tax bracket, and $200/mo property tax savings (based on $6K/yr prop tax)
Your net home ownership experience after tax is ~$2600/mo compared to $1800/mo rent.
Now for the savings side:
$5100/yr towards principle vs 18000+interest in your HYSA so you're "saving $13,800 difference in HYSA vs principle on mortgage.
Now consider if your home appreciates 5%/yr or up to 472,500 in yr 1, now you're down pmt of $16,875 + the principle in yr 1 is $21,975, but your real equity in your home is now $44,475 and you have 18,900 in HYSA.
This is where buying vs. renting builds wealth. No, i'm not in real estate or mortgage lending. My numbers above could certainly stand some refinement but in general, rent almost never beats owning.
Your net home ownership experience after tax is ~$2600/mo compared to $1800/mo rent.
Now for the savings side:
$5100/yr towards principle vs 18000+interest in your HYSA so you're "saving $13,800 difference in HYSA vs principle on mortgage.
Now consider if your home appreciates 5%/yr or up to 472,500 in yr 1, now you're down pmt of $16,875 + the principle in yr 1 is $21,975, but your real equity in your home is now $44,475 and you have 18,900 in HYSA.
This is where buying vs. renting builds wealth. No, i'm not in real estate or mortgage lending. My numbers above could certainly stand some refinement but in general, rent almost never beats owning.
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