123ArticleOnline Logo
Welcome to 123ArticleOnline.com!

ALL >> Investing---Finance >> View Article

Wisconsin Home Buying Vs Renting

By Author: Douglas Lenski
Total Articles: 5

If you are moving into an area with the intention of living there for the next seven years, one important decision is whether you should rent or buy your dwelling. You don't want to spend seven years in an apartment if you have a family, so you are left with the decision as to whether or not you will have the equity to make selling worthwhile.
If you are going to buy a house now and then sell the house in seven years, there are several different costs to consider. The purchase costs are what you accrue when you go to closing to buy the house. These are the general closing costs that the seller does not cover, as well as your down payment.
Lost opportunity costs cover what you would have made if you had been able to invest your down payment elsewhere instead of putting it into your home.
Annual costs are the expenses that pop up every month or year while you own the house. Some of these are mortgage payment, renovation expenses, maintenance expenses, homeowner's association fees, property tax payments and home insurance. Some of these (property taxes and the interest portion of your mortgage) are tax deductions. The mortgage payment goes up each year while you own the house because the interest part shrinks, making your tax deduction smaller each year.
Selling costs accrue when you head to closing to sell the house. These include the realtor's commission, the outstanding balance from your lender, as well as any of the closing costs that you have to absorb as part of the transaction.
If you decide to rent for the next seven years, there are also some costs to consider. Initial costs include the security deposit for the property and any realtor's fee.
Yearly costs include contents insurance for the items you have in the property, also known as “renter's insurance,” and your rent payments.
Assuming that home prices will go up an average of 2% and rents go up an average of 3% each year, here is a hypothetical situation to help you decide. Let's say you have the choice between a house costing $200,000 to buy, with 20 percent down and an interest rate of 6%. Property taxes are 1.35% per year. A similar house is available to rent for $1,500 a month, with a $1,500 security deposit.
Factoring in those assumed increases, by the end of year 7, and assuming an industry average cost of $284 per year in contents insurance for a home of that value, you are looking at spending $26,194 in just the seventh year of renting, and a total of $154,620 over seven years on the house.
If you buy the house, you would spend $22,588 in year 7. This assumes a national average expense of $1,351 in paying the water department each year, as well as annual renovations and maintenance and renovations of $1,149 and insurance costs of $1,057. Year 7's Lost Opportunity costs, which come from amortizing the lost value of not investing the $40,000 down payment, are $5,634. Over seven years, you would have spent a projected $115,623 – $38,997 less than you would have if you had rented. Of course, this does assume that you sell the house at that increased value and that the sale goes smoothly and quickly enough to keep from handcuffing you to the home when it is time to leave.
Just from the numbers, it looks like buying is the better choice over seven years. Talk to a Wisconsin mortgage specialist if you are looking to move into the Badger State in the near future!
Source – cost calculator http://www.nytimes.com/interactive/business/buy-rent-calculator.html?_r=0

ABOUT THE AUTHOR
Douglas Lenski is a 14 year veteran of the mortgage industry and the current President of Wholesale Mortgage Services of Wisconsin. He has trained 20 loan officers and 8 mortgage loan processors. He is considered an expert in the mortgage industry by his peers. He has written many blogs on mortgage rates today , Wisconsin Mortgage rates and many more.

Total Views: 45Word Count: 664See All articles From Author

Investing / Finance Articles

1. Home Loans Western Sydney – Take Help Of Home Loan Experts To Get The Right Loan!
Author: Mc Cutcheon

2. It’s Time For 401(k) Plans To Become Part Of The Sharing Economy
Author: Terrance Power

3. Reliable Forex Robot Can Enhance Your Success Rate In The Forex Market
Author: johnsyanol

4. Donate To Ngo And Save Tax – Know How
Author: kanan james

5. The Asquith Group Tips On How To Get Out Of Debt
Author: Ava Kraegen

6. 5 Mistakes You Must Avoid In Sip
Author: Hetal Pandya

7. Taking A Loan On Property Is Now A Piece Of Cake!
Author: Hero FinCorp

8. What To Expect From A Credit Union Vancouver Wa
Author: Brian Miller

9. Top Reasons To Rely On An Oregon Credit Union
Author: Brian Miller

10. Credit Union Vancouver Wa Advantages
Author: Brian Miller

11. Auto Insurance Tips
Author: a plus auto insurance

12. Genuine Forex Robot Can Help You Make Good Profits Within No Time
Author: johnsyanol

13. Current Home Loan Interest Rates | Home Loans In Chennai
Author: Loansa Assis

14. Home Loans Scheme For Low Income Earners In Nsw
Author: Declan Murphy

15. Low Deposit Home Loans – Options Are Still There When You Search For Campbelltown Home Loans!
Author: Mc Cutcheon


Login To Account
Login Email:
Password:
Forgot Password?
New User?
Sign Up Newsletter
Email Address: