Snowflake House-Hunters

Yes, amidst the snowflakes and icy sidewalks, there are people out there shuffling through the muck, hoping to find a new home. Maybe some are first-time homebuyers who want that tax credit that expires soon. Maybe a few of you are moving back to the area. Maybe some are thinking of buying in the springtime and want to start looking now. All these reasons are great reasons! Why not buy yourself a new home for Christmas or Hanukkah?

I found a great cost analysis of buying vs. renting on our MRIS website. Keep in mind, this is an example for someone buying in the $350,000 range with 20% down. Take a peek and see why so many people purchase homes.

Payment breakdown

	Rent	Buy
Monthly payment	$2,100.00	$1,524.56
Monthly taxes, maintenance, insurance, association dues and PMI	$30.00	$639.58
Total monthly payment	$2,130.00 to $2,393.57	$2,164.14
Total payments over 5 years	$135,590.22	$129,848.40

Tax savings over 5 years

	Rent	Buy
Total payments	$135,590.22	$129,848.40
Total payments less tax savings	$135,590.22	$106,418.02
Total tax savings	$0.00	$23,430.38

Home appreciation vs comparison investment over 5 years

	Rent	Buy
Sale price of home		$425,828.51
Remaining loan balance		($257,573.14)
Cost for purchase and sale of home		($31,849.71)
Down payment, points, and closing costs invested	$74,300.00
Investment return	$8,946.69
Investment tax owed	($2,236.67)
Gain on home or comparison investment	$81,010.02	$136,405.66

Total cost analysis over 5 years

	Rent	Buy
Total payments	$135,590.22	$129,848.40
Total tax savings		($23,430.38)
Gain on home or comparison investment	($81,010.02)	($136,405.66)
Total	$54,580.20	($29,987.64)

NOTE: Home purchase is potentially the greatest investment you will make in your lifetime. This calculator considers only the financial benefits of renting vs buying. Home ownership has other benefits as well. Please consider all the factors when making your final decision.

Your tax rate is used to calculate the monthly advantage of your interest deduction. If you wish not to include the interest deduction advantage, you may set your tax rate to 0. Please keep in mind that your tax deduction may be limited beyond the scope of this calculator. Talk to your tax advisor before using these results in your specific situation.

Your investment rate of return is used to compare the difference between investing in a house and investing elsewhere (e.g., like your savings account).

Tax on your yield in equity is not taken into account. Talk to your tax advisor if you think you may be subject to this tax.

This calculator does not consider the potential benefits of accepting the standard rent credit or the standard deduction when comparing the tax savings of renting versus buying a home. The decision to itemize or accept the standard deduction is beyond the scope of this calculator.

"Cost for purchase and sale of home" includes agent commission for selling as well as closing costs, points, and fees for buying.

This calculator assumes that the difference between the monthly rent payment and the monthly mortgage payment is not invested.

NOTE 2: The information provided by these calculators is for illustrative purposes only. The default figures shown are hypothetical and may not be applicable to your individual situation. Be sure to consult a financial professional prior to relying on the results. The calculated results are intended for illustrative purposes only and accuracy is not guaranteed.

And don't forget, I can help you find that perfect property in Maryland or Pennsylvania now, or at the turn of the New Year. I don't mind the snow and the muck. I even have a 4-wheel drive truck take you shopping.

Happy Holidays!