This is the second in a series of posts that answers the question:  “Should I rent or should I buy?”

In this scenario I am taking a home that has been on the market for quite a while and rather than take less than they wanted, the sellers rented it out.  However, if the renters would have paid the asking price for the home their monthly payments would be less than their rent.  With the mortgage interest deduction, significantly less.

The property that we’ll be discussing today is 212 4^th Street in Sausalito.  This property was on the market for sale at an asking price of $1,299,000.

If this property sold at the asking price of $1,299,000 the financials would look something like this:

–        Down payment of 20%, or $259,800

–        Loan in the amount of $1,039,200

–        30 Year Fixed Rate of 4.375%

–        Monthly Mortgage Principal and Interest payment of $5188.57

–        Monthly Property Taxes at approximately $1217.81

–        Monthly Homeowners/Hazard Insurance at approximately $162.38

–        Total Monthly Cost of Ownership at $6568.76

–        If you factor in the current mortgage interest deduction, the Monthly Cost of Ownership is reduced to $4528.67

So, right about now, you are probably asking yourself, “SO?  What did this home rent for?”

This home rented for $6700 per month.

That’s right.  This home rented for more than it would cost even before the mortgage interest deduction. 

Now, you might be saying to yourself, “Yeah, but what about that $259,800 down payment?”  And to that I say, if you divide that down payment by 360 months, or the term of the loan, then it comes to $721.66 per month.  Add that to the $4528.67 per month (cost after the mortgage interest deduction) and you get a total of $5250.33.

So, no matter how you slice it, in this scenario you would save at least $1449 per month if you purchased this home rather than renting.

Financial information was calculated using a spreadsheet calculator provided to me by Pierre Masquelier.  For more information about financing a home contact Pierre. 

To see everything currently available on our MLS click here.

To see some of these homes in person and discuss Marin County homeownership contact me directly.

Categories: UncategorizedTags: best places to live, is now a good time to buy?, Marin County, rent vs. own, right now it's cheaper to buy than rent, Sausalito, should I rent or buy?