Answer depends on the following. How long you plan on staying in the area, can you afford a downpayment and can you qualify for a loan.
As I discussed in a prior blog post, the advantage of owning real estate is that maybe someday you can pay off the mortgage and have no rent expense. You still have property taxes, insurance and maintenance. But not having to pay rent and not being kicked out of your rental by your land lord is an advantage of owning your home, condo or town home.
Here is a quick scenario. Say you can buy a entry level home for $400,000, with 20% down, payments based on interest rates on a 30 year fixed mortgage at 4.84% (rate noted from internet ads), your monthly payment is $1,686.67 plus taxes and insurance (combined guesstimate of $3,800) $316.67/month, totals a monthly housing expense of $2,003.34. So, if it costs you $1,800 to rent the same place, vs owning with the monthly payment of $2,003.34 what do you do? Contact your accountant to figure your net tax savings from your mortgage interest deduction. Factor in the mortgage interest deduction, assuming your primary residence, and the deal gets better for the owner. Say your mortgage interest for the first year of ownership is $15,488 and your in the 30% tax bracket (hypothetical example), your mortgage interest deduction would be $4,646.40. Divide the annual mortgage interest deduction by 12 equals $387.2. So the net housing expense in this example, by owning is $1,616.14 which is less than renting!
Of course buying a home with a mortgage is a long term commitment. And selling real estate you own has transaction costs involved. Currently, values are off their highs in many areas and interest rates are still historically low. If interest rates rise, your purchasing power decreases.
In order to get ahead in life, some degree of risk is involved.
Thank you, we'll be in touch!