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It’s often cheaper to buy than rent

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POSTED March 26, 2009 4:53 a.m.
Raymus Village is an established neighborhood just on the northern outskirts of Manteca surrounded by almond trees where Lathrop Road meets Highway 99.

Three-bedroom homes with two bathrooms and 1,420 square feet in the subdivision rent for $1,150 a month.

That is just over $100 more a month - $935 that covers insurance and taxes - than what it would cost to buy a foreclosure home of the same model at 14592 Navajo Way. The down payment using a 3.5 percent FHA loan is $4,896 plus closing costs.

It gets even sweeter thanks to Uncle Sam. Buy that home this year and you qualify for an $8,000 tax credit that essentially reimburses you on April 15, 2010 for your down payment and closing costs.

Factor in tax deduction advantages, and your monthly housing costs owning the same model versus renting is roughly $200 in your favor with the added bonus you won’t be subjected to rent increases and it is a place you own and not someone else.

There are large numbers of people who rent who may not realize they can afford to buy. What it takes to see if you are among the renters who can actually afford to buy is just a little bit of time. Call a mortgage broker and arrange for a face-to-face. It won’t cost you a dime. They will tell you what you should bring to the meeting in terms of financial information. They can give you a quick rundown plus access your credit report. Many buyers are finding they can repair dings or up scores on credit reports in just a couple of months’ time and be ready to buy.

Sometimes it is as simple as opening a secured credit card for three months and charging your groceries and immediately paying it off to get your credit score up.

As for upfront costs, mortgage brokers are experts at going over your budget and pointing out ways you can save money by reducing the number of times you eat out to dropping non-necessities. Most people discover after the first year of homeownership they are in a better financial situation due to taxes as well as monthly housing costs being locked in for 30 years,

If you do find out you can buy by acting now you should have adequate time before prices and interest rates start their inevitable upward rebound to secure a piece of the proverbial American Dream.

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