The answer is “it depends”. The opportunity of owning a home requires a significant upfront cash investment. Generally speaking, if you plan on living in the home for 3 years or less, you might be better off renting. But if you believe you are likely to be in the home for 5 or more years, you may probably be better off buying now. Why? Continue reading:
TAX ADVANTAGES: During the first 5 years, most of your monthly payment will be interest, which you can deduct from your taxes (consult a CPA, not legal advice). Can’t do that with rent.
APPRECIATION: Homes in San Antonio are currently appreciating at a rate of 5.4% (click here to see report). That means two things: 1) your rent payment is likely to go up, while your mortgage payment will not, and 2) your home will most likely go up in value. This is called “equity”. Your equity can easily offset any “high interest rate” you could be paying. Example, lets say you buy a $100K home and pay an interest rate of 10%. You will pay $10K in interest that year. However, if your home went up in value and you gained 5.4% equity, that means your home gained approximately $5,400 in value. Subtract $5,400 from $10,000 paid and your NET interest paid is about $4,600 or 4.6%. Pretty cool, huh? In five years, if appreciation continues as before, you equity will be about 30%. Refinancing could be easier or you could have a nice payday if you sell.
PRIDE OF OWNERSHIP AND STABILITY: What is the price tag on the wonderful feeling of a home cooked meal in your own kitchen? The joy of seeing your children play in the backyard you built? The fulfillment of hanging your own pictures, painting your own wall the colors you want, or growing your own garden? Its hard to quantify, but pride of ownership has no price. No wonder its called the “American Dream”. Being fully confident that you are giving your family stability has no price. Its YOUR home – its THEIR home!
In summary, we recommend you try every avenue to secure a bank loan. This probably IS the least expensive way to buy. BUT if you can’t, don’t let an apparently “high interest rate” stop you from realizing the “American Dream”.
Click here for a Case Study on what the “Real Costs of Waiting and Renting” can be when evaluating a $200K home purchase. You may be surprised what the REAL NET numbers look like.