One bedroom apartment for 800 a month or 3 bedroom house for 1000 a month mortgage (with the tax perk of ownin

Question

I am a 26 year old single teacher in Atlanta with some credit card debt that is going to take 2-4 years to pay off depending on how much I can hustle and supplement in my income. I am debating on whether to rent a one bedroom apartment for 800-900 a month, or buy a gorgeous brand new 3 bedroom townhome, which will cost me a total of 1100 a month, which includes hoa, pmi, and insurance. Owning will give me the tax write off and I know it will make me very happy to pull into my own driveway everyday. Plus, i'm pretty sure this area will be prime real estate when I'm ready to sell and if not, I can take a hit because I'm buying it for 30k less than the sticker price based on grants I'm receiving. Anyhow, should I suck it up in a tiny apartment and put the extra 200 a month toward my credit card debt, or just get the townhome? BTW, having a roommate is out of the question (bad, bad bad experience). I will, however, be getting a slight raise and plan to take on a second job. Thanks a lot.

Answer 1

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Answer 2

This is always an interesting debate, but what no one ever talks about is retirement.  To me the question is how long do you plan on staying in this townhome.  Once you own a home free and clear, you have more leverage, do you think your 401k will ever be worth more than your home? The one poster said the tax write off is a myth, I disagree, you actually get two breaks here, one is the interest, the other is the PMI.  The question here is how are your federal taxes?  if your almost breaking even, getting that tax write off will help, especially if you don't have children.  Sit down with all your finances, and get a solid picture, with your situation, are you  even going to be in the home to enjoy it?  But the trade off there is you will most likely dread coming home to the apartment, which will not cash you out anything when you leave it.  Home ownership is tough in the beginning, but if you plan smart, and don't use it as an atm, you'll reap the rewards down the road.  

PS, if your going to buy, do it quick or wait until after the election, rates are going up

Answer 3

I live in Cobb County...Hello ATL!

Anyway, I bought my house a few years ago. I was living in Marietta and rented a two bed room for $650...It was tight but do-able. I decided to buy a home because I wanted to own something.

I like it. I am a little bit out from Marietta now, but still in Cobb County. I commute to work everyday. Gas is a little high, but housing is cheaper where I live.

I learned the hard way, if you buy make sure to buy and keep a home warranty. I will be having to replace my heater and A/C unit. It is totally fried...and it will cost me some $4K to fix this thingy....if you own you will be responsible to fix your own stuff....and home repairs never come at a convenient time. A home warranty will pay for major repairs. It was about $600 per year and I didn't have it when it was time to re-new. Since then, I've replaced my circuit breaker box and now the furnace/ac....it would have paid for itself.

Even so, it is a home improvement and I can get the value back when ever I re-sell. I will have to live here for at least 5 years to build equity to make my money back. That is something else to consider.  How long to you plan to live there.

Try going OTP, and commute you might find cheaper housing.  You can look anyway. (that is outside the parameter for everyone outside ATL...)

Note: Sounds like you might be getting a good deal...If you plan on staying there a while go for it.  I am kind of stuck right where I am.... but it's not a bad place to be stuck. Where you are talking about is not a bad area either.

Answer 4

Buying is not always best. What are the grants for? Many times they have a restriction concerning when you can sell and to who and by what terms. If you don't stay in the home so many years it must be paid back etc.

It will cost more than $200 extra a month to own. There will be upkeep, lawn maintenance, higher utilities. More furniture, window coverings. HOA dues go up after a developer turns over property to associations. Another biggie is: Can you cut back your spending? Thats why you owe so much on CC right? Is your tax bracket high enough to benefit from the interest deduction? How far from your work is each place?  If you work two jobs, when will you be home to enjoy it? How many years will it take to pay off the mortgage?

Answer 5

As long as you're sure you can afford the $1000 every month, that's a far better prospect. There's the tax aspect, of course. Plus you will have something to show for it when you decide to leave, and that townhouse could even appreciate in value. Beats the h**l out of a bunch of canceled rent checks!

Answer 6

When you own or rent, do you include utilities?

The question is basically make or break depending on what you reasonably expect prices locally to do in the near future. If prices are currently sliding it can be worth while to wait, unless you would lose some other way. For example, if you do not need to buy until November, and it looks to be likely that prices will slip before then, don't hurry.

It is best to do a bit of checking to find out what is really happening in prices. The local average selling price moving up does not mean prices are moving up any more than that lower priced houses are selling poorly. Average selling prices going down can mean that  working class people have started to buy low priced houses.

But you could do either buy or rent, as long as rent does not mean long term lease.

Answer 7

The tax write off is a MYTH.  For every $1.00 you 'save' in taxes, you paid the BANK $4.00 in INTEREST.  There is NO deduction for the principal.  You can deduct property taxes even if you DON'T have a mortgage.

Paying $30K less than market price is also a myth.  If the property was actually worth $30K more, you would not be able to buy it at the price you are offering.

Answer 8

If you can afford it, the house wins every time for me, renting on a short term basis is fine, but it is "dead money" and you have nothing to show for it, wereas, a house is an investment for your future.

Answer 9

Buy, buy, buy. But buy with your head not your heart.