Those who have never bought a home have likely heard people say that renting is like throwing money away.
Why rent when you could buy? Well, there are good cases to be made for renting, depending on your circumstances.
Renting means never having to worry about being trapped in an underwater mortgage, or making expensive repairs, and you can relocate when and where you want without worrying about selling a home.
Owning a home means a yard, the freedom to paint the walls whatever color you choose, and a chance to build equity and hopefully gain an asset that will grow in value. It looks like a good time to buy a home.
But for those who aren't certain they're going to live in a home they buy for many years, buying can turn out to be the avenue where your throw money away. There can be greater risks than with renting, but with greater risk, more headaches, and unforeseen expenses.
With a 30-year mortgage, more than two-thirds of the money spent on mortgage payments during the first five years will go toward interest, building little equity.
First-time home buyers may not be aware of all the costs associated with ownership. Let's go one put some hard numbers on it.
A homebuyer should assume the basic monthly expenses will add around 50% to 75% to the mortgage payment. Here's the math:
Lets say your mortgage payment is $1000. In addition to your monthly mortgage payment, add about $75 to your for private mortgage insurance.
That's $1075 a month. Sounds pretty good.
Now here's a rundown of additional annual costs:
Utilities: $2,700. That's electricity and water for an efficient, 1,800-square- foot house, with three occupants.
Homeowners insurance: $2,200. The cost depends on proximity to the coast. Flood insurance is extra.
Property taxes: About $750 to $1,300 on a house valued at the median price, depending on tax rates where it's located.
Homeowners association fees: $350. Some neighborhoods have HOAs, others don't, and fees can vary greatly.
Termite bond: $330. If you live in the Lowcountry, you'll want termite protection.
Stormwater/Solid Waste fees: $120 to $240 in most areas.
Add them up, and on a monthly basis, those expenses bring the monthly expenses plus mortgage up quite a bit.
Plus at least $100 a month to account for repairs and replacing stuff that breaks. The to-do list never goes away.
For information on renting an apartment in West Columbia, SC, contact Abberly Village Apartments.
Original article – The Post and Courier