Very few people love vocabulary study, and yet many adult dreams such as buying a house require a little study of definitions, jargon and phrases. From time to time we believe that our readers might like to learn or review some of these specialized terms.
So, today, Palm State Mortgage takes you back to school in order to continue our investigation of the benefits of Buying versus renting.

We believe that once you know some terminology, you will be better able to discern the real life financial differences between owning and renting your home. That’s right, this begins like an English lesson, ends up like a math lesson, and both lessons will effect your wallet.

A Short Primer For Buyers

1. Purchase Costs: These are the costs you sustain when you go to “closing.” for the home you are purchasing. These will includes your down payment and your closing costs.

2. Yearly costs: These costs are incurred monthly or include some yearly expenses. These would include: mortgage payments, condo fees, neighborhood community living fees, renovation costs, maintenance costs, property taxes and homeowner’s insurance.

3. Lost Opportunity Costs: These monies are tracked for the “initial purchase costs and for the yearly costs.” A Cool Fact: These numbers will give you a hint of how much money you could have made had you chosen to invest that down payment in lieu of buying a home.

4. Selling costs: On the flip side of the coin, you can probably guess that selling costs are the costs you pay when you attend the closing for the home you are selling.

This list includes the broker’s commission and other fees, “as well as the remaining principal balance that you pay to your mortgage bank.”

5. “Proceeds from home sale” is the term for the money that you are given by the buyer of your home.
A Cool Fact: This amount equals that year’s value of the home. It is not something you spend, but money you receive.

       A Cool Fact: You have done really well if you made enough of a profit that it not only covered the cost of your home, but also all of your yearly operating expenses.

A Short Primer For Renters

1. Initial Costs: When you rent, be sure you are aware of the rent security deposit, pet fees, and, if applicable, the broker’s fee.
2. Yearly Costs: Monthly rent, landscape upkeep fees, and the cost of renter’s insurance.
3. Lost Opportunity Costs: These are calculated each year for both your initial costs and your yearly costs.

A Short Comment About the Bottom Line For Your Budget

In the final analysis, there is a simple rule of thumb involving the legendary Six Year Plan: If you stay in your home six years, buying is regarded by the experts as a better choice. Experts report that purchasing it usually saves a client about ten thousand dollars a year, or a little less than $1700.00 per month.
Now, that’s a really cool fact.
Once again, Palm State Mortgage invites happy house hunters to investigate the many possibiliteis of buying a home. Come see your multiple mortgaging options before make the big decision to become a buyer, not a renter.