In just three years, buying a home in Lancaster becomes cheaper than renting.
Whether to buy property or continue renting is a question many of us have faced or will face in the next few years. A lot of my friends struggle with wanting to buy but think that the initial investment is cost prohibitive.
The truth is that when you rent, you are helping someone else build a future, build equity in their property, and benefit from your hard earned money.
Based on what I see everyday as a Lancaster City Realtor, a few simple calculations on a new app at Realtor.com makes it clear that buying is hands down the best value for your money.
Let’s look at the numbers.
Take an average home price of $120,000 and utilize an FHA loan which requires only a 3.5% down payment – that’s $4,200.
That number gives you a solid three to four bedroom place in one of the up-and-coming neighborhoods in the city.
There are closings costs of course, but Lancaster County is blessed to have programs like Lancaster Housing Opportunity Program’s Home Buyers Course (insert Hyperlink here), that helps prospective buyers defray closing cost.
Now consider the alternative. Renting.
Consider that you may pay $1,000 to $1,200 to rent a house of that size. Over the course of one year renting, you are already paying less owning that home. At a 4% interest rate, and including taxes and insurances, a homeowner will pay about $940 per month.
Here is the cost breakdown:
- Initial cost: Buying at $6,000 vs. Renting at $1,000.
- Year costs over two years: Buying at $21,736 vs. Renting at $24,555
- By year 30, the life of a loan: Buying costs $406,246 vs. Renting costs at $796,367
When you own, you are the one building wealth. You are the one building equity, and you are the one benefiting from your hard work.
Buying is not as difficult as you may think. If you have a job and a relatively good credit score, you can afford to buy a house.