Buying vs. Renting: Be Your Own Landlord
January 8th, 2008categories: Chico Buyers
by guest writer Mike Wiegert
In times of very low interest rates and a significant dip in the market, purchasing a primary residence in Chico might be the opportune thing to do.
The Government National Mortgage Association’s (Ginnie Mae) website has a very interesting calculator that can show a buyer the benefits of buying vs. renting over a ten year period. Ten years might seem like a long time but just as your grandfather’s Chico Realtor said to him, real estate is a long term investment.
The website uses the example of someone buying a home for $150,000 vs. renting a home for $750.00 per month. Ginnie Mae’s calculator makes a general comparison between a given home price and it’s relative monthly rental value. The example factors in a modest two percent annual appreciation and normal expenses for taxes, insurance, cost of selling, income tax savings, rental increases and mortgage insurance.
The end result: a buyer will save over $34,000 in the ten year period!
Chico real estate for sale rarely comes priced at $150,000, so I adjusted the calculator to a modest $250,000 price and put in a current interest rate of 6.3 percent. I also factored in $1,100.00 per month rent. The 10 year savings was $56,525. That kind of savings really makes you want to think about the value of the freedom of renting in Chico, doesn’t it?
