As always, buyers are looking for the best price on a home to buy. However, even though mortgage interest rates have been inching upwards again, they are still near historical lows. In essence, the cost of the home over the 30 year loan will be influenced by the interest rate. Now is a great time to start building equity and taking advantage of the fabulous interest rates.
If you are currently renting, you are probably asking yourself is homeownership possible? What do the numbers look like? Below is an Rent vs. owning example. *Tax bracket may be more or less. Please consult your CPA for accuracy.
Rent vs. owning
Sales price: $450,000
Current Rent: $ 2,300
Estimated monthly Cost of Owning:
1st Mortgage Amount LTV 80% $360,000 loan
Principal and Interest Payment (5% interest rate) $1,933
Property Taxes Santa Clara County 1.25% 469
Homeowners insurance approx. 80
TOTAL MONTHLY PAYMENT: $2,481
Less:
38% tax bracket monthly savings* $ 748
Monthly Equity Build $ 433
SAVINGS: $1,181
Effective Mortgage Payment $1,301
Monthly Savings (Cost of Buying) $999
