I was working with a buyer who just decided to rent for a year before buying a home. She is looking at a pool home rental that requires a $2200 security deposit, and $1850 per month rent. That is $22,000 total rent paid in the year. The other option is to buy a home. There are brand new homes in Palm Coast starting under $250,000. The monthly mortgage payment when financing this amount would be about $1270 monthly. After a year, and the average appreciation on a home of 5% a year, the home would now be worth $262,500. An increase in your investment of $12500. If you look at it this way, your mortgage payments for a year would be $15,240. Subtract the appreciation of $12,500, and your net cost for the year would be $2740. Which sounds better to you, $22000 a year of $2740 a year?
This does not take into consideration your loss of buying now, and what you will pay in that year. That could be another $12,500 loss for the renter. Total it up, and you have lost $36,500 in a year.
