Saturday, January 23, 2010

The Costs Of The American Dream

From Home sweet rental by James Altucher:

When making the decision to buy vs. rent, people usually consider several factors -- the rent vs. mortgage payment being the primary question. But there are other financial factors to consider, including:

* Your insurance premium.

* Property taxes (which are usually higher than any tax deduction you get from your mortgage interest).

* Maintenance (pipes break, electricity problems, etc.).

* Utilities (utilities and maintenance for renters is often reflected in the rental price, but it's not reflected in a mortgage when you own).

* Yard work, pest control, remodeling, etc. (again, rents usually have this built into the price, but mortgages don't).

And let's not forget those initial costs that always seem to add up to more than you expect:

* A down payment of at least 15 percent, which is $90,000 on a $600,000 home.

* Closing costs, usually 5 percent of loan amount, or another $25,000.

* Initial remodeling costs.

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