I am moving to Princeton…Should I rent or should I buy?
This is a very common question today. Wall Street is nothing short of scary. The economy seems anemic. What to do? Rent or Buy a home in Princeton? Lets take a quick look at how the numbers play out on similar townhouses in the Griggs Farm townhouse community located in Princeton Township.
Here is a Griggs Farm Townhouse that recently settled:
This Griggs Farm townhouse recently closed for $372,500 after only ten days on the market.
Keep in mind you can move into this home with only 3.5% downpayment, or $13,037.50
Based on today’s rates , without taxes you are looking at a payment of $1805 per month. With taxes and insurance and the monthly home owners fee you are looking at a payment of approximately $2690 +/-. As owning real estate is a get rich over time proposition, lets take a look at the benefits of owning a home over a five year period.
1. 5 years of Appreciation:
Year 1: (3%) depreciation
Year 2: 0% (flat, no appreciation)
Year 3: 1%
Year 4: 3%
Year 5: 5%
Total 5 Year Appreciation: $19,000
2. Five Year Tax Benefit:
You (currently) can write the interest off your mortgage.
Over five years that would total approximately $20 – $25,000!
3. Amortization (paying down) of your loan
Every time that you make a loan payment you create equity in the home. Over the course of five years, that is over 60 loan payments. You can create $20,000 + in equity over that time period. That does not include if you ever make an extra payment or two…which you should!
4. Low Interest Rates
Rates are low. Really Low. Like, so low it is unreal and hard to imagine. If you lock in a low rate vs a rent price that is only going to go up every year you are in it, you will save an additional $5,000.
Total Return on your Griggs Farm Townhouse over 5 years:
Here is a recent rental that closed in Griggs Farm in Princeton. Also rented fast, under 30 days. Rent payment (for now…) is $2900 per month!!
The two townhouses look similar. The first townhouse that sold not only do you get to control a $370,000 asset for less than $15,000 down you get all the financial benefits of home ownership. As a tenant you do not enjoy any of the above mentioned financial benefits. You would however pay a lot in rent.
Total 5 year rental payments for a Griggs Farm Townhouse at $2900 per month:
If you are thinking of renting or buying be sure that you know your #’s. Know your buying power. Know what the short term and long term benefits are. Good luck!