Is Buying a House Worth It: https://www.hauseit.com/is-buying-a-house-worth-it/
Save Money with a Hauseit Buyer Closing Credit: https://www.hauseit.com/hauseit-buyer-closing-credit-nyc/
Buying a house is worth it if you have enough savings for a down payment plus closing costs, and rates are low enough such that your all in housing expenses are roughly the same or less than what you’re paying in rent every month.
The Upfront Cost of Buying a House
You’ll need to save up for a down payment and closing costs in order to buy a house. In fact, you’ll generally need to save up to 20% for a standard down payment, plus another 3% to 4% in closing costs if you’re buying a house with financing in NYC. Closing costs will vary based on which city and even which state you are buying in.
Build Equity vs Paying Rent
If mortgage rates are low and you’re able to finance your purchase, then you may be lucky enough to be able to pay less in mortgage payments, home insurance and HoA dues vs what you would pay in rent on a monthly basis.
However, if in 10 years you’ve paid down your mortgage to $500,000 and you sell it for $1,000,000 then you’d net $500,000, excluding closing costs in our perfect world. As you can see, all those mortgage payments you made over the years really went to yourself, because you decreased debt and as a result increased equity in your home.
Here’s a Pro Tip: If what you’d pay in rent only equals your mortgage interest + your home insurance premiums + your HoA dues, not including your mortgage principal, then the decision making process becomes more complicated. From a purely financial perspective, whether you choose to buy or rent should be analyzed with opportunity cost in mind. Will that money you’ve saved up be better deployed in real estate, or will it do better in the stock market or another investment opportunity?
A House Is an Illiquid Asset
Keep in mind that real estate is one of the most illiquid asset classes available. Unlike buying a stock, you cannot easily and quickly buy and sell a property. As an example, the average days on the market to a signed contract in NYC as of this writing is over 100 days. That means it takes over three months just to lock down a buyer, and this doesn’t account for the additional 30 to 90 days it’ll take from contract signing to closing.
So is buying a house worth it if you might not be able to sell it? Sure, it still can be because all investments have some risk of illiquidity, though the risk may be more pronounced for real estate. Plus, people always need a place to live, including yourself!
Reduce Your Buyer Closing Costs in NYC: https://www.hauseit.com/hauseit-buyer-closing-credit-nyc/
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