Question: >: Hello. I was wondering if any of you had some advice for a >: soontobemarried couple. We are both employed parttime, but not in debt >: at all. We are debating whether buying a house would be cheaper than >: renting a good apartment or if we are just teasing ourselves with the >: idea. >: Is there a rough ‘formula’ to use to figure out the monthly costs of >: owning a home in relation to its price (adding in the incidentals, etc)?
>: We’d love to have our own place, but we don’t know if it’s realistic. Are >: we crazy?
>: Thanks in advance for the advice.
Answer: Part time is the killer here. The banks and mortgage companies will NOT like that one bit. However, no backend debt is a really great thing to have. We didn’t have any backend debt when we bought ours in July of ‘93 and it really helped us “squeeze the ratios” (explanation below). The formula is just a little more complicated than 1% of purchase price, but it does basically work out to that in the end. You will probably get a $7000 homeowners deduction from the selling price at the very least. If a VA loan, you get an even larger deduction.
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