You might be asking this question to yourself, why should I buy if the media keeps telling me we have not hit the bottom? This may be true or may not be true but one factor the media can’t predict is the interest rates.
Today’s interest rate you can obtain in Tampa for a 30 year fixed rate on a fha loan is 4.85 keep in mind rates change daily, lets say you found a home for $100,000 here is what your estimated payment would be.
I provided you with numbers using current active homes for sale on the market and what the payment would be approximately vs what it would cost to rent the same home. both homes are comparable in size and bedrooms. You can see for the same home you can own and save about $5047.68 yearly
If you plan on renting you will need to come up with first months rent and security deposit so around $2400 based on the above example.
If you plan on buying you will need approximate $3500 for an fha loan and this is assuming we can negotiate the seller to pay the closing costs which of course as your real estate agent we will consult you on how to make an offer that will give you the best chance of being accepted.
So you need to weigh the pros and cons of buying vs renting now, if you feel we are close to the bottom of the market then it is my opinion there is no better time to buy, if you feel that we have not hit bottom then what you can be potentially throwing away in rent may be offset of any potential drop in prices.
If you feel home prices are going to drop even more dramitcly then you may better off renting but keep in mind we don’t know if the interest rates are going to climb back up over the next one year and two year periods.
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{ 21 comments }
You’ve got a great point here that so many people forget about, all worried about the “investment aspect” – we still need a place to live, and its often cheaper to own than rent, not to mention at the end you’ll probably more than likely make some of that money back
Chelles last blog post..10 Reasons Nobody Is Reading Your Real Estate Blog
Option to buy is what many people want these days. They rental the property for 11 months (not long by the law) with option to buy for a fixed price and they take of the rental payment from the sale price if the buy in the end of the rental. Good for booths parts.
Guys, I’m a Realtor, in a new area, renting a home. If I would have bought a year and a half ago, like I almost did, I would be down $100,000 in equity right now. I am no rent fan but there are certainly time that renting is a great idea. If you have good instincts, know the market is going to fall for a while, renting is a great option. I would have never had this opinion 5 years ago but as you get older you gain experience and learn. This housing crisis has opened my eyes to more than owning as an option.
you can’t argue with those numbers, you’d be foolish to be renting!
Robert Eskiw – Edmonton Homes For Sale
Edmonton Condominiumss last blog post..Ottawa to create $1B fund for hard-hit workers
That’s one of the best posts I’ve read about why you should buy now. Let’s say that prices will drop a little further down. If you don’t plan on moving to another city for the next five years or even three, the money saved in rent over than 3 year period would be just over 15,000. So even if the property price dropped another 10k, you would still be making money. Plus you will have paid down the loan for three years. Granted that would be a tiny amount of equity, but it beats paying someone else’s mortgage!
Charless last blog post..Looking at the Las Vegas Real Estate Market
Hi, I think we will see a nice spike on the demand side if the fed gov launches an up to $15,000 tax credit. It could be messy for another year or so, but I have to think that with prices in many areas nearly 1/2of peak, it is pretty close to the bottom. As always make your decision based on need not on speculation.
Andy-Ann Arbor Real Estates last blog post..Home Purchase Tax Credit Moving to $15,000? Senate Approves Bill
As Andy just stated, the first time buyer (soon to be all buyers) tax credit will get people buying homes again. I think that low interest rates are the fuel and the tax credit will be the spark for some fireworks.
I would absolutely recommend that if an individual (or couple) can afford to buy, and of course get approved to buy, then they should… Why not make a solid long-term investment..?
On the other hand, not everyone can get approved for a loan. A close friend of mine, who between himself and his wife make good money, doesn’t have the credit rating to qualify. In his situation, he and his family opted to rent a house over an apartment, which gave them a much larger living area, big backyard, and most importantly, easy access to and from his car (for groceries, moving, etc.). The house they ended up renting was 600 sq. ft. larger and $300 less expensive (per month) than their previous apartment.
Ricks last blog post..Quick Delivery Homes Monday
If a person can afford it and plans to stay in the same place for many years, I would definitely recommend buying. It is a relatively good investment and once you pay off the mortgage (if you do) you don’t have to pay anymore, it’s yours. If you’re renting for years and years, you never end up with any property or anything to show for all that money you threw away.
Good analogy. If the markets do go down or if they go up — that is the question. Do
you take the risk to buy now. If america is going to recover than the resounding answer is yes – buy. I am bullish now that Obama is in and things will turn . Don’t get stuck looking!
Great post, this really puts some of the tangibles on paper, but you need to remember that houses are so more customizable.
I think it also depends on the state your in. The taxes in some tsates add alot more than 110 a month. Ny or some others would be 300 or more for taxes a month. The interest rates are so low it is the best time no matter where you live to buy a home.
You have to take in the fact you will pay less taxes because you can write off the interest on mortage still. That alone makes it a great time to buy instead of renting.
Yeah, buying would be the best thing to do right now because of the houses these builders want to get rid of right away. It would be crazy to rent when it’s the buyers advantage market.
From a small research I’ve done in my DB it turns out that most people are actually moving to houses they’ve purchased lately rather than rentals.
It seems like the low interest of the mortgages is really effecting people.
Buying is the way to go. This applies to other things as well such as cars and furniture. In some circumstances renting/leasing is better but for the most part I prefer to buy.
Wow, I enjoyed using this. Very useful and user-friendly. Thanks for sharing!
We rented for 3 years and it drove me crazy. It is honestly like throwing your money out the window.
I’ve been a homeowner for 7 years, best financial decison I’ve ever made. I pay less (because I don’t have pay someone else’s mortgage plus profit) and I have total control over what I can do to it.
Buy wins.
Steve
Well, the reason we should be buying now is that the interest rates are going up, and will continue to do so. We can’t keep the T-bills this low forever. Buyers need to look at “cost” vs. “price”. Yes, price may be going down, but cost is going up. If you are in the market to buy, I would buy now, before rates increase for the next few years (in my opinion). Great article!
In the last 15 years this is the best time to buy a home, especially for first time buyers. Mortgage rates are very low now and there are a lot of programs that fit the needs of the buyers.
I have 3 associates that are successful realtors. Two of them had their homes foreclosed and the other still rents. One of the foreclosed victims is in a position to buy through his fiance. But why would he buy now in this specific market when we are due a large wave of ARM adjustments. Point is, all real estate is local and renting vs. buying has a specific difference in each area.
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