I just placed an offer for a client who told me that he’ll be SAVING $450 a month by purchasing the condo we found for him. He is actually SAVING money by purchasing rather than renting. Really? I asked him. Does your calculation INCLUDE the monthly HOA (homeowner’s association) dues on the condo? He assured me that it did – and that yes, he’ll save $450 a month. Not to mention the money he’ll save on his income taxes. Interest he pays on his mortgage is TAX DEDUCTIBLE, and in the early years of a mortgage, much of what you pay is interest rather than principal. So he’ll see more savings add up when he files his income taxes with the I.R.S.
It’s unbelievable, isn’t it? Why are so many people still renting? My client assures me he’s going to spread the word to his neighbors in the apartment complex, and I hope to see more clients from there! But why aren’t more people automatically following his lead, with interest rates as low as they are, and home prices bottoming out? As long as my client holds on to his condo for a few years, chances are he’s making a heck of an investment – and saving money in the interim to boot!
One reason more renters aren’t purchasing, of course, is that many of them have been foreclosed upon or have had to short sale their properties (a short sale is when the seller sells the home for less than is owed on it, and the mortgage holder agrees to accept a reduced payoff). If you’ve been through a foreclosure or short sale, you won’t be able to purchase a new home for some period of time. (Typically, lenders tell me, a foreclosure will prevent you from purchasing for seven years, and short sale for at least three years, although these time periods can vary). Then there’s another group of potential buyers who have relocated toAtlanta, but who cannot afford to buy a new home until their home in the former state sells. And of course, it’s much harder to sell a home these days – you’re competing with all the foreclosures and short sales.
But if you haven’t had a foreclosure, short sale or bankruptcy recently, if you have steady employment and enough money for a down payment, it seems crazy NOT to buy. The client in this example is buying a one bedroom condo in a great part of Buckhead for less than $50,000. Just two years ago the same condo was selling for double that. I have other clients who are looking at homes $200,000 and below – and we are finding LOTS of homes in that price range that they like. They are having difficulty deciding upon which they like best. Home prices are just incredibly affordable right now.
If you are currently renting, you owe it to yourself to explore whether or not purchasing a home makes sense for you. Interest rates are again at record lows and who knows HOW LONG these low home prices will last – so please, call or email me or your other favorite Realtor – we’d love to help!