Often young adults don’t understand how to do “rent versus buy” calculations. Many people forget to take into account equity increases and tax savings. I am always happy to meet with anyone and walk through the math based on his or her lifestyle choices. Here’s an example based on a current listing I have at 140 Grove Street 4I. If you were to rent this unit now, it would cost $1500 per month which includes your heat expense. That is $18,000 per year.
If you were to purchase this property at an interest rate of 4.1% and 20% down on a purchase price of $180K, your annual interest expense in the first year is only $5,857 and decreases each year thereafter; and your property taxes are $2,179. The balance of your annual mortgage payment totaling $2,037 comes back to you in equity. Your common charges on this property of $365 per month are offset substantially by your mortgage interest tax deduction and property tax deduction.
The average rent in Stamford is $2500 per month or $30,000 per year. With the right strategy and savings plan, it is easy to spend less than that to live in Fairfield County or at least have something concrete to show for it in terms of home equity if you choose to spend that much or more. Take the time to do the math for yourself and your adult children.