Out of a 2k+ monthly payment, $400 goes towards paying down the principal.
You know how much equity I’d have after 1 year? Less than 5k.
You know how much closing costs would be if I sold? Up to 32-40k.
I’d need about 8 years of living in the house to build enough equity to just break even when selling
This is of course not factoring in a single expensive maintenance item. New roof, new sewer pipes, new HVAC, new water heater will run you ballpark of 50k in maintenance costs, and those are just the big ticket items. Throw those in, and you wouldn’t even break even moving after living somewhere for a decade.
If you’re young and still establishing your career, it’s better to have the ability to pursue better job opportunities across the country while renting. In my industry it’s common for folks to find new, higher paying jobs every 3-5 years. Based on my assumptions made, if I move before 8 years, I’d have paid more owning a home than renting due to closing costs.
EDIT: This also doesn’t factor in the closing costs you’ve paid as a buyer. I THINK mine were around 10k? I’ll have to check. Google says average rates are between 3-6% of the loan amount so 10k is probably right. So add another 1-2 years before breaking even.
Out of a 2k+ monthly payment, $400 goes towards paying down the principal.
You know how much equity I’d have after 1 year? Less than 5k.
You know how much closing costs would be if I sold? Up to 32-40k.
I’d need about 8 years of living in the house to build enough equity to just break even when selling
This is of course not factoring in a single expensive maintenance item. New roof, new sewer pipes, new HVAC, new water heater will run you ballpark of 50k in maintenance costs, and those are just the big ticket items. Throw those in, and you wouldn’t even break even moving after living somewhere for a decade.
If you’re young and still establishing your career, it’s better to have the ability to pursue better job opportunities across the country while renting. In my industry it’s common for folks to find new, higher paying jobs every 3-5 years. Based on my assumptions made, if I move before 8 years, I’d have paid more owning a home than renting due to closing costs.
EDIT: This also doesn’t factor in the closing costs you’ve paid as a buyer. I THINK mine were around 10k? I’ll have to check. Google says average rates are between 3-6% of the loan amount so 10k is probably right. So add another 1-2 years before breaking even.