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How Much is Our Townhouse Costing Us?

If you’re looking to buy a house, you might want to go ahead and run the numbers for your area. To say buying is better than renting or vice versa is foolish, as everyone has a different situation.

Run the numbers before you go ahead and buy a house.

Run the numbers before you go ahead and buy a house.

 

Rent vs Buying Costs

I wanted to give you the run down with our housing expenses, so you can see for yourself how it actually works.

Housing Expenses

  • Mortgage         $ 661.67
  • Escrow  *         $168.58
  • HOA Fees        $112

Total                             $942.25

*Our escrow account takes care of insurance and property taxes.

Rental Expenses

I based the rent amount on a comparable 3 bedroom apartment in the same area. We’re in an area of  town with some growth. I used Rentometer to get an estimate.

  • Rent                        $1,050
  • Insurance            $22.67

Total                                 $1,072.67

One of the reasons we’ve bought this particular townhouse is the resale value. We definitely plan on being here in this particular place at least 3 years so we don’t have to pay back the $8,000 tax credit back.

Weigh the Pros and Cons of Owning a Home

So you can see, buying a townhouse was a better option for us than renting an equivalent. We live in Raleigh, NC and depending on what part of town you’re in, you can find a huge range of prices for homes and apartments.

You don’t have to fall for the home buying myths. Find out for yourself if buying is the best move for you. If you decide that buying a  home works for you, make sure you take advantage of the tax credits available.

If you’re really serious about buying a house, do yourself a favor and check out this resource.

Your Thoughts on Buying a House

What factors did you consider when deciding? Are you happy with your decision or do you have regrets? Note: I want to thank J for inspiring me to share my housing costs.

Photo Credit:Francis Bourgouin

by Elle Martinez

Elle Martinez helps families at Couple Money achieve financial freedom by sharing tips for reducing debt, increase income, and building net worth. Learn how to live on one income and have fun with the second..

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  1. Where do you live again?! I *wish* any of the numbers in this area would come to those you’ve outlined here. Our escrow for property taxes is MORE than your mortgage. And the rent used in your 3 BR apartment example barely gets you a 1 BR rental here. I find it so amazing that these things fluctuate throughout the country.

    As for our situation, we knew going in that renting was a much better deal that buying a home, but for us, we wanted a house to make into a home for a lifetime — and we found it. So the heart won this one. Of course, we got the best deal we could and a great mortgage rate thanks to excellent credit.

  2. That’s great your cost of ownership is cheaper than renting!

    You get more savings right, as your highlight your gross mortgage and not net after tax savings?

  3. @ Nicole: I’m amazed how things fluctuate even in this city in regards to real estate price. I didn’t realize how expensive it is to live in NJ. I’m glad you got a good deal on a house that you love.

    @Sam: Yep, those are our actual numbers- no sleight of hand :) We took our time for buying a house. A motivation for us to move this city from VA was the job opportunities and lower housing costs. The only thing I miss about VA (besides our friends) is not being by the beach.

  4. Looks like a good choice! Did you not have to make a down payment or pay closing costs for the townhouse? If you did, that should be included in your comparison as a one-time payment, as you would not have had to pay that if you’re renting. Also, you will likely have maintenance expenses if something breaks in the house; whereas while renting, the landlord will take care of that for you. Just some extra thoughts for making a full comparison.

  5. @Flexo: We didn’t have to play for closing costs, but we did make a down payment of around $5,000. I’ve written about other running costs of home ownership including,
    * Homeowner’s Insurance
    * Private mortgage insurance
    * Home Association Fees
    * Property Tax
    * Maintenance & Improvement
    I’m definitely include maintenance cost as they happen with the house. Thanks for keeping a sharp eye on my costs! :)

  6. Re: Flexo’s comment

    I read somewhere it’s 3% a year on the value of your home (not to be used monthly, but just in case a roof falls in or something big breaks, they all tell me they should save 3% a year in a fund for those house-only related emergencies).

    Assuming you paid $300,000 with 3%, that’s $9000/year or $750/month to be saved (ideally) for maintenance and improvement.

    But let’s say it’s even only $200/month that you’ve save on the low end, that’s still $1142 versus $1072 in renting.

    You’re over by $70/month as a low estimate, and it could be as high as $620 of a difference (assuming the full 3% savings).

    Plus, renting can sometimes come with benefits like all utilities included — which you didn’t include in your home versus apartment costs, although I am assuming you put it as “no utilities” for renting when you did your rent-o-meter.

    You really can’t leave out those basic expenses as part of your “comparison”; if that were the case, I’d buy a house right now! :)

    (Ok not really. I’m going to move soon.)

  7. I have to agree with FB here. I trust you’ve analyzed your choice appropriately. I also assume that you didn’t buy a house simple for the financial aspects, because in most areas, that almost never makes sense to do. I’m doubting that $130 difference covers your increased utilities at the house, and maintenance also. Will you have saved enough from that $130 a month to cover a new roof, a new furnace, or a termite invasion? What if they are all in the same year? It happens… What if you want to renovate your kitchen? We’ll call that another $10k or so. If you were renting, just move, and horray!, new kitchen! Outside of those factors, what about mowing the grass, or repainting your trim, and so on. Those things always cost money, and most people don’t consider them until they’ve already bought the house. One other aspect that most people don’t think about is the increase cost of living when you own a larger home. Usually, rentals are smaller, especially if you are in an apartment. When you buy a house, you might get an extra bedroom, a basement, maybe another bathroom. You’ve got to buy stuff to go in those rooms now. Sure, you can say you won’t buy more, but I can bet you really will. And what about the time it takes to clean all those extra rooms? How much is that worth per month. Consider it might take you, what, 4 or 5 hours a month (probably a low figure) to do extra ‘stuff’ around the house. I could be making money during that time, and that $130 is now moot. Whew, it wouldn’t take me any time at all to burn through that $130 savings a month. Even if you can pay to make repairs and maintenance, think of the time you’ll spend either doing it yourself, or finding someone to do it. Do you need to take a morning off work when the plumber comes to fix that leak? Do I? Nope, I don’t even bother to fix the handle on the toilet when it gets a little loose. Call the LL, it’s fixed when I get home from work. Our maintenance people will clean our carpets for us, and clean and wax the hard surface floors. What will that cost you? It’s just all about lifestyle. I’m sure your numbers work for you. And, I applaud you for telling readers not to fall for the typical buying myths. I like the article.

  8. @FB: I’m holding off on utilities until we get a fair idea of the average. Right now, they are slightly lower with the new place. Utilities included with rent is not common in this area, so that’s why I didn’t include the comparison.

    I’m just listing the costs as they come, kind of how I do with our car expenses. I just wanted to show the big costs of owning a house vs renting in our area. We went for a just the right size townhouse and we kept it within our budget.

    @Infinion: Nope, you’re right. While we did run the numbers to make sure it was in our budget, it was more than a financial decision to buy a house.

    As for furniture, so far we’ve picked up a gently used love seat on the couch for free and we’re utilizing our milk crates pretty well. It’s a new construct,so we’re not looking to do any big renovations.

    I truly believe you can make owning house as expensive as you want; we just choose to keep it simple.