The idea of owning a home is a very daunting task for a first time home buyer. Is buying ideal for me and my family?
Well, every homeowner has been there done that. Some of them have tasted and saw home ownership was not for them but before you get to that conclusion, let us do simple maths first.
You bought a $250,000 home in a desirable neighborhood. Your mortgage is $1,500/ month on a 30-year fixed loan. By the time you finish paying off, your total cost on that house will be roughly $540,000. That means you’ve paid $290,000 on interest.
$540,000 – $250,000 = $290,000
So your monthly mortgage without interest is real $694.5. Your monthly interest rates is $805.5. The question is are you ok or happy paying someone $805/month for you to “someday” own a home? You can find a lot of $805 rentals out there.
I would be happy paying 1/2 of $805 on interests or even less but the fact interest rate is higher than the mortgage is quite disturbing for me. At the same time I understand taxes were rolled into the mortgage but why do I have to pay insurance to protect the bank’s loss?
The upside is after 30 years that $540k (originally $250k) home is yours. Also, another thing to consider is home’s value increase often time and in rare occasions, they decrease. Your $250k home may as well be worth $540k or more by the time you’ve paid off. So it is a win-win situation.
How about renting a cool $1500 home. In this case, I pay interest to no one!
If your rent remains the same for 30 years (hardly the case) then you will also find yourself have paid a landlord $540,000. The difference between you and a person who is paying the mortgage on a house is he’ll have a home he can call his own and perhaps some equity in it while you have nothing to show. He can literally become your landlord.
So, in the end, you’ll have to settle it straight from your heart that life is not free. Own a home or renting it= it gonna cost your blood and sweat either way. And while some ways may sound better than others (I didn’t go into much details on any of them) at the end of the day you gotta pay someone to live. And who is that someone?
I chose ME. The question is how do I bypass all and I pay ME. Well, get my book!! (coming soon)
Contact me if you are interested and be the first one to receive initial copies.