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Subject:  Re: Need advice on paying off debt... Date:  6/22/2014  3:39 AM
Author:  aj485 Number:  308285 of 313061

Because buying a house is also on my mind since I rather invest the 1200/month rent into mortgage....

Oh, and by the way - when you get a 30 year mortgage, you are, for the 15 - 20 years, mostly just paying rent on the money that you borrowed. So it's rent either way. And if you are buying with the minimum down, the rent that you will pay on the money you borrowed to buy the house will be a lot higher, as you will either have to pay PMI (with a conventional mortgage), MIP (with an FHA mortgage) or interest on a second mortgage. And there are a lot more expenses when you own a house than when you rent - maintenance, repairs, property taxes, insurance, costs to buy, costs to sell, etc. Yes, you get a deduction, but if you are paying $1200 a month in PITI (equivalent to your rent), you are probably starting at around a $10k annual deduction for the house. However, even as a single person, you would already be able to deduct $6100 of that as your standard deduction. So the additional $4k deduction will probably net you about $1k in tax savings. Compared to all the extra costs in owning a home, it may not save you a dime. And if your standard deduction is probably already as much or more than your deductions for interest and property taxes will end up being. So buying a house with a PITI of $1200 (same as your rent) will end up costing you more in the long run.

So, you really need to look at the rent vs. buy calculations for your area to see if it's worth it to buy just to 'not pay rent'. If you want to buy because of the lifestyle, and not just to 'not pay rent' - that's a different discussion. But that's not the reason you gave - so you need to make sure you aren't going to end up costing yourself extra money just to 'not pay rent'.

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