Buying Vs. Renting
One of the things that I see the most often are couples who think they cannot afford to own a home while they’re paying close to $1,000 per month on rent. Rental rates are high and one of the things you may not know is that you are not only paying the mortgage for the owner but usually an additional $300 per month in addition to the mortgage. Renting in many ways could be compared to kayaking up stream, it is a losing battle. It is a lot of effort and money put into something that will never give you a benefit.
Though it is nice to not have to think about fixing anything on the home while renting there, the truth is that you are paying a premium for that amenity. The average home owner pays about $1,000 per year on repairs and services for the home. That’s about $83 per month, $83 that can easily be justified while owning a home and gaining equity. In Chattanooga and North Georgia home ownership costs are some of the lowest in the nation. In Chattanooga you can still easily find a 1,400sqft home for $150,000, which is very affordable. On a home like that with 10% down, an interest rate of 3.7% for a loan, and average taxes, you would have a monthly payment of around $896. That is less then you are probably spending on rent.
One of the other benefits that I mentioned earlier was equity gain. You may or may not know what this means. Equity gain is simply the appreciated value of a home over time. Owning a home is owning an investment. In a growing city like Chattanooga there is a lot of equity gain because as more people move to a city it creates more demand for the homes. As there is more demand for homes it causes the prices to go up. As prices go up and people buy those homes in your neighborhood it creates more value and equity gain in your home. As an example of this, my first home in Chattanooga was purchased for $122,000. Over the course of five years (with some renovations) the home increased to a value of $215,000. That’s an increase of $93,000 in equity. That’s a yearly earning of $18,600 in home equity. If we had been renting someone else would have gained that equity with our money. So simply put, I would gladly pay $83 dollars per month to maintain and repair my own home if it means that I could be gaining $18,600 per year in equity.
You will be surprised at what homes you may be able to afford and gain.