COMMENTARY | When I start thinking about large down payments, homeowners insurance, and the possibility of paying private mortgage insurance, I get a little leery about buying a house. I feel like my $850 a month rent for my modest one bedroom duplex is too high, but it is a lot easier to just write that check on the first of every month and be done with it. After all, when you factor in all the other costs of homeownership, maybe my rent isn't too high. Maybe I should just stay where I am.
But a recent survey done by the real estate website Zillow says that I'm making the best financial decision by buying instead of renting. According to CNNMoney, Zillow researched 200 metro areas and found that buying makes more sense in over 75 percent of those areas. In cities like Chicago, IL, Dallas, TX, and Miami, FL, homeowners would reach the breakeven point - where it makes more financial sense to own - in three years or less.
The survey took everything about homeownership into account, including mortgage payments, homeowners insurance, utility costs and tax deductions. Then it compared those costs with the cost of renting. Even factoring all of the associated costs that frighten first time homebuyers like me, it still makes more sense to buy.
In my city, this is especially true when you consider rising rent. Stan Humphries, chief economist for Zillow told CNNMoney that rent costs have gone up an average of 5 percent in the United States. Where I live, rent costs are going up by far more than that in some areas. For example, last year I paid $750 a month in rent. When my lease ended, I wrote the landlord asking to renew for another year. When she wrote back, I was told my rent would go to up $850 - a 13 percent increase in a year.
While a 13 percent increase is bad enough, I do not receive any perks for living in my rental. No utilities are included in the cost of my rent, I had to buy my own appliances, and I pay for most repairs that need done in my duplex. I know I live like a homeowner now, and seeing how quickly I could reach the breakeven point eases any fears I have about buying a house. After all, I work hard, I want to get the most value for the money I spend.
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More From This Contributor:
- Personal Budgeting
- Real Estate
- homeowners insurance
- private mortgage insurance