There are 101 different ways to save money. Buying real estate is one of the best places to start! A client once told me that he that he had no choice of if he was to pay a mortgage payment, he did however had a choice of if it was going to be his mortgage or his landlords.

Buying a home is a big decision and a big commitment. There are times when you need to rent such as if you can't qualify to buy or you will be in the area short term or less than 1 year. Lets have an example of two couples, couple "A" and Couple "B" over a three year period:

Tax Benefits: $0.00

Equity: $0.00

Appreciation: $0.00

NET LOSS FOR THREE YEARS RENT = $21,600

Payment is:

Principal & Interest $542

Property Taxes: $25

Mortgage Insurance $33

Total Monthly Payment $599/month

Total Paid In Payments Over 3 years = $21,564

Tax Benefits (25% tax bracket, $19,247 interest paid - $19,247 x .25): $4,811 tax savings

Equity: ($21,564 - $19,247 ) = $2,317

Appreciation: (5% appreciation - $80,000 x 1.15%) $12,000.00

NET GAIN FOR THREE YEARS OWNING = $19,128

As you can see couple "B" was able to save/earn $40,728 ($19,128 + $21,600) over couple "A". Most people can easily see the amount they pay in rent, they forget to count in the loss of equity, tax savings & appreciation.

As you can see from the above appreciation estimated that "saving up" more money for a down payment you can loose ground since the properties continue to appreciate and get more expensive. See the section on zero down if you are trouble saving for the down payment.

Be sure to call me if you have any questions on renting -vs- buying.

I look forward to working with you!

R. Scott Stone
Principal Broker

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