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I am reading about a low income housing development going in somewhere not too far away.
1-bedroom apartments will start at $950 a month.
I'm 20 years into a 30 year note and we're not paying that much including the escrow servicing.
It really underscores that you need to get your ducks in a row and get to owning rather than renting.
I overpay my mortgage with extra principle every month and I'm still $200 less than a 1-bedroom apartment every month.
What. The. Actual. Fuck.
Owning seemed more expensive at first, but as time goes even our sub-prime fixed-rate seems to be good now.
You're well into the 2nd half of your mortgage so your equity is building quickly at this point, especially if you are regularly making additional principle payments that go right to the bottom line w/o interest. With as high as interest rates are right now even if your rate wasn't great when you got it, it may not be bad compared to what people are getting right now.
ReplyDeleteRenting is almost always more expensive because landlords can't afford to rent at a loss for long. Sometimes new leases may have teasers in them to build occupancy like in a new complex, but over time landlords have to cover their expenses and make money. About the only time I think renting may make sense is if someone is transient enough they need to move frequently or if they have very small requirements for space. "Tiny homes" are a recent phenomenon to address that, where ownership may be an option even for single people who live lean (which you would have to do with most of those tiny homes!).
The big thing though is that when you buy you build equity for yourself, that may not seem important up front but eventually it can be huge. When you rent you build equity for the landlord (assuming they don't own outright). Even if they are competitive enough to not make a lot of money directly on rent, they're still profiting from the equity you're building for them in the long term.
A lot of what you are seeing here is that when you buy some of the costs get fixed, the P&I part of the mortgage T&I will go up over time typically. Taxes and insurance can be a bitch, especially taxes in states that have no income tax where property tax pays the burden of school taxes (although I am in general against state income taxes) and insurance in states which have had a lot of weather related claims. Renters feel inflation more than buyers because landlords usually have to increase rents to cover rising costs and landlords have more costs like having to cover time when a property isn't leased, costs of aquiring tenants, etc. And they have more legalities they have to deal with that can add up. Landlords also don't get the benefit of things like homestead exemptions on property taxes.
Anyway, in today's economy, stay put with what you have for sure.
-swj
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ReplyDeleteWhat is annoying is to realize is after your mortgage is paid off, you STILL need to send $$$ to others because the authority feel you still need to feel like a slave so you remain happy in your chains. So don't use that extra cash that used to pay off mortgage - save it and use it to pay off the property tax.
ReplyDeleteIt really pays to own your property only when you live in a neighborhood where you can afford the costs. The thing is, they keep moving the goal posts away, the bastards.
jrg