Introduction
It is not an easy task for me. I like to read an article in less than 15 minutes, and I like to write a blog about it. The article is here to read.
Reading is such enjoyable
I like to copy and paste my most enjoyable reading here. I also like to highlight a few keywords to look into. I added subheading for paragraphs.5. RENTING FOR TOO LONG
There are so many advantages to owning a home versus renting. You can also deduct your mortgage interest on your taxes, which ends up being thousands and thousands of dollars back for most people (it’s like a rebate for buying a house!). Buying a house or condo is also a tangible asset and a great way to diversify your portfolio. You can also live in your investment and let it appreciate (which if you live in a nice in-demand location it probably will).
Hone a new skill using 3 - 5 years
Julia think that I can learn a lot as a condo owner in 3-5 years.
Know the market
The one advantage of renting that pro-renters tout is “flexibility,” but you still likely have a lease you can’t get out of. You can probably sell a house in most markets faster than getting out of a lease, but I digress. In most markets in the US it’s cheaper to buy instead of rent if you are going to live in the same place for at least 3-5 years.
I rented for an extra year when I should have bought a condo at the bottom of the market. I was trying to save money for a 20% down payment, which was a stupid decision. Once I saw the property values starting to bounce back I jumped and bought my condo with only 5% down with a small PMI (private mortgage insurance) premium of $61/month to be able to buy my apartment.
No asset except down payment
Work with bank
This isn’t always a good decision, but for me it was and here’s why: I saw that prices were going up and I was confident that I could pay the mortgage at my current rate for at least the next 2 years comfortably. I was confident that a new job and learning how to start a consulting business were going to pay off. I also saved the $30,000 in my emergency fund in case I needed it for the mortgage down the road.
I made a very calculated decision and ended up paying down the mortgage quickly over the next year until I owed less than 80% of the assessed home value on the mortgage. I got the condo re-appraised the next year and refinanced to a lower rate without the PMI. If I would have bought the condo a year earlier with the same down payment I would have made 25% on my investment given rising home prices in my area.
Currently I have a 15 year mortgage at 2.625% and I am keeping the mortgage even though I could pay off my condo fully, because I am confident that I can get a higher return on my money than the 2.625% I would get by paying off the mortgage. Do the math, use a simple rent vs. buy calculator and buy it the numbers make sense. It could be one of the best money decisions you can make.
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