Foster The American Dream

Find your home in the Knoxville community

  • Meet Shannon
    • Contact Me
  • Sell A Home
  • Find A Home
    • Search Houses by Area
      • Cedar Bluff Area
      • Clinton Area
      • Concord/Northshore Area
      • Downtown Knoxville Area
      • Farragut Area
      • Fountain City Area
      • Fourth & Gill Area
      • Halls Area
      • Hardin Valley Area
      • Holston Hills Area
      • Island Home Area
      • Karns Area
      • Maryville & Alcoa Area
      • Powell Area
      • Sequoyah Hills Area
      • Seymour Area
      • South Knoxville Area
      • West Hills Area
    • Tell Me About Your Dream Home!
  • Blog
    • Buyer Advice
    • Seller Advice
  • Relocating

Real Cost of Housing

October 26, 2015 by Sf37917

A variety of factors have led to a shortage of rental units, especially single family homes, and as a result, rents have been steadily increasing nationwide. In most markets, it is considerably less to own than to rent.


Buy vs Own a HouseLet’s look at an example of a $250,000 home with 3.5% down payment and a 4.50% mortgage for 30 years. We’ll assume a 3% annual appreciation, 25% federal tax bracket, $1,200 annual maintenance and current rent of $2,100 a month.
In some cases, the total house payment is less than the rent for a similar size and condition home which supports a purchase. However, when you factor in some of the financial benefits like principal reduction, appreciation and tax savings, the difference becomes even more dramatic.

The total house payment with property taxes, insurance and mortgage insurance premium would be $1,834 a month. Once the principal reduction, appreciation, tax savings and maintenance have been considered, the net cost of housing is about $673 a month. It costs a tenant over $1,400 more a month to rent than to own which would amount to $17,000 in the first year alone. That’s almost twice as much as the down payment to get into the home.

2015-10-26_7-28-06.png

In this example, the down payment of $8,750 grows to almost $94,000 in seven years due to appreciation and amortization of the loan. Owning a home is one of the few investments available that allow these personal and financial benefits.

One of the obstacles in the past five to seven years has been a borrower’s inability to qualify for a mortgage but new programs and relaxed requirements have allowed more people to be eligible for mortgages. The important step is to talk to a trusted mortgage professional very early in the home search process. Your REALTOR® can make recommendations based on experience from actual closed transactions.

Use the Rent vs. Own calculator to see what the benefits might be in your price range.

Facebook Twitter Email Pinterest

Filed Under: Buyer Advice Tagged With: Buyer financing, Financing a home, Real cost of buying, Renting vs Owning a Home

Knoxville Neighborhoods

Knoxville Neighborhoods

Knox & You in 52 Event Calendar

March 2017
JA-Headshot-web_small CBWW01

Shannon Foster-Boline

Realty Executives® Associates

Realtor® Broker, CRS®, ABR®, GRI, SRES®

Phone: 865.588.3232
Mobile: 865.617.8287
Address: 109 S Northshore Drive
Knoxville TN 37919
Each office is independently owned & operated.

Follow Me

Visit Us On TwitterVisit Us On FacebookVisit Us On GooglePlusVisit Us On LinkedinCheck Our Feed
ABR LogoCRS-2009-Logo RENE_LOGO

Copyright © 2018 · AgentPress Pro Theme on Genesis Framework · WordPress · Log in