Home ownership is a great way to save money and build equity.  If you are paying rent now, you may be able to purchase a home today.  Most renters believe that it takes to much money to buy a home.  Times have changed, please fill out the form at the bottom of the page and I will be glad to visit with you about buying your first home.  Interest rates are still low and they may go up in the near future, it is time to be proactive on purchasing a home.

Your home purchase breaks even after 2.0 years. This is an example of a buying a $100,000 home verses renting. This is based on your home's equity minus a 6% sales commission paid to brokers or real estate agents when you sell your home. It also assumes your home will appreciate at 2% per year and you have an income tax rate of 28%. If you cannot remain in your home for at least 2.5 years you should consider continuing to rent.

I calculated a breakeven point by examining how long it would take to create enough equity in your home to exceed the value of investing your cash on hand. I also accounted for differences in your monthly rent and house payments. If your rent payment is less than your net house payment, I added that monthly savings to your investment. If your house payment is less than your rent payment I subtract that amount from your investment. You may notice that on the schedule at the bottom of this report the investment value can be reported as negative. This happens if your house payment is significantly lower than your rent payment.  It illustrates that if you continue to rent the extra cost of renting would, in effect, use up
your cash on hand.

Loan Information

For $919.66 and a down payment of $7,000 you can purchase a home with a price of $100,000.  This is for a 30 year mortgage at 6% in the amount of $93,000. Total closing costs for this loan are estimated at $3,000.00. Your current monthly rent is $900. The expected inflation rate of 3% annually was used to estimate future rent and property taxes. The rate of return used for investments was 7% per year.

Your $919.66 monthly payment consists of Principal and interest $557.58 PMI $38.75 Taxes $198.33 Insurance $125.00 Closing costs of $3,000.00 consists of: Amount paid of points $0.00 Origination fee $0 Other closing costs $3,000

To avoid PMI payments, a $20,000 down payment is required. This equals 20% of your home's purchase price. The total amount of cash required for a 20% down payment plus closing costs would be $23,000.

Analysis of Estimated Future Payments

Year	House Payment (PITI)	Payment After Tax Savings	Rent Payment	Value of Investment	Home Equity
1	$919.66	$735.39	$900.00	$8,653	$4,022
2	$926.13	$742.44	$927.00	$6,964	$7,152
3	$932.73	$749.69	$954.81	$4,901	$10,395
4	$939.45	$757.17	$983.45	$2,432	$13,757
5	$946.32	$764.88	$1,012.96	-$481	$17,243
6	$953.32	$772.82	$1,043.35	-$3,876	$20,859
7	$960.46	$781.01	$1,074.65	-$7,796	$24,612
8	$967.74	$789.46	$1,106.89	-$12,286	$28,507
9	$936.42	$759.43	$1,140.09	-$17,471	$32,554
10	$943.99	$768.43	$1,174.30	-$23,735	$36,757
11	$951.72	$777.73	$1,209.52	-$30,759	$41,127
12	$959.60	$787.33	$1,245.81	-$38,606	$45,670
13	$967.64	$797.25	$1,283.18	-$47,343	$50,397
14	$975.85	$807.51	$1,321.68	-$57,043	$55,315
15	$984.21	$818.11	$1,361.33	-$67,782	$60,436
16	$992.74	$829.08	$1,402.17	-$79,645	$65,769
17	$1,001.45	$840.44	$1,444.24	-$92,719	$71,325
18	$1,010.32	$852.19	$1,487.56	-$107,101	$77,116
19	$1,019.38	$864.36	$1,532.19	-$122,893	$83,155
20	$1,028.62	$876.97	$1,578.16	-$140,206	$89,455
21	$1,038.04	$890.04	$1,625.50	-$159,156	$96,029
22	$1,047.65	$903.59	$1,674.27	-$179,870	$102,892
23	$1,057.45	$917.65	$1,724.49	-$202,485	$110,059
24	$1,067.44	$932.23	$1,776.23	-$227,144	$117,548
25	$1,077.64	$947.36	$1,829.51	-$254,004	$125,374
26	$1,088.04	$963.08	$1,884.40	-$283,232	$133,558
27	$1,098.65	$979.41	$1,940.93	-$315,006	$142,118
28	$1,109.47	$996.38	$1,999.16	-$349,517	$151,074
29	$1,120.51	$1,014.02	$2,059.13	-$386,972	$160,449
30	$1,131.77	$1,032.37	$2,120.91	-$427,589	$170,268

Matt cannot and does not guarantee their accuracy or their applicability to your circumstances. He encourages you to seek personalized advice from qualified professionals regarding all personal finance issues.

Please fill out and Matt will get back with you.