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In article <1152065289.677002.187940@m79g2000cwm.googlegroups.com>, Tom says...
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>My wife and I are debating whether we should buy a house / condo /
>townhome or just rent for a longer period..
>
>We have been renting for over 5 years now.. and getting close to being
>bored living in apartments..
>
>
>BUT, when I do calculations, it never seems to make financial sense to
>buy a house..
>
>
>On a ~ 200k house inside / close to the loop, one pays ~ 3k / yr or
>higher in taxes plus at around 6% mortgage, the interest alone is ~
>$12k / yr. So an expense of $ 15k per year.. (I'm keeping the
>principal repayment out of this as this is applied towards reducing the
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>loan amount and so not an expense)
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>Minus.. the interest deduction from one's income.. Roughly $4k saving
>(at a 33% tax bracket)
>
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>So recurring expenses of about $ 11k. ($15k minus $4k) (plus
>maintenance costs if in a condo/ townhome..et al)
>
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>I'm keeping the one time closing cost out of this for now..
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>So in effect.. Rougly, I'm talking about paying $1000 per month even
>when I own a home..
>
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>I agree that this comes with the potential benefit of appreciation..
>but historical prices in the Houston area has not shown any
>appreciation for a while.. loong while.. and the market in Houston is
>pretty much flat...
>
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>If I rent, I'll be paying $1k / month towards rent..
>If I own a home, I'll be paying $1k / month towards interest /
>property taxes..
>
>
>Now if I add in the one time closing costs into the picture, ~ $15k..
>then it does not make sense for me buy a home unless I plan to stay
>there for at least 3 - 5 years..
>
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>So.. I'm requesting advise from all existing homeowners..
>
>
>Why not rent a great place for $1.5k / month with all amenities taken
>care of by the apartment folks rather than own and pay more?
>
>
>I appreciate any and all comments.. Thank you..
Well, in the financials you need to take into account that you would be building
equity in a house, even if there is no market appreciation.
But an important factor here is non-financial - how satisfied you are with
apartment living vs. home ownership. How much do you value having fewer
respondibilities for apartment ownership vs. less control while living in
apartments. Also, quality of the environment regarding the people you deal with
daily. I bought my house at age 39, and I think it is generally quite true that
home owners have more vested in having decent relations with neighbors than
apartment dwellers. And things like, how do you feel about repairs and
improvements being done at the landlord's timing and quality then seeing the
increase in rent, vs. doing repairs and improvements on your own timing and
priority and quality but paying chunks out of pocket.
Is this a disagreement in your marriage? If so, what are the chances of happy
settlement if you continue to rent vs. continuing to buy. If certain
responsibilities of homeownership (upkeep, mowing) are unpleasant to you, can
you hire them out.
You need to look at the whole picture. Remember, money is to help make your
life happy and pleasant. Don't put the cart before the horse and make your life
unhappy or unpleasant for the sake of money. This applies to some people if
they were to buy; and it applies to some people if they were to continue to
rent. Only you know which category you're in.
Cheers,
Banty
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Re: Why buy a house?
