I’m having a really hard time distinguishing between home ownership and this being the place I live in now. Do I love this place because it’s my favorite of all the places I’ve ever lived in or do I love it because I own it? Maybe it’s a little bit of both. I’ve changed some of the little things that I don’t love about the place, learned to live with the others, and will change more as time goes on. I may not be the home decor fiend like many other home owners are, but I’ve definitely made this place my own.
I’ve been watching the real estate market around my place and I think that I could sell it for enough to make buying make more sense than renting already, one year in. Isn’t that crazy? If I could sell my place for the exact amount I bought it for, buying would be cheaper by the end of 2014, so another year and a half.
Now that it’s been a year, I want to take a look at the math on renting versus buying so far.
- Over the course of the last 12 months, I’ve paid out $14,096.17 in mortgage interest, HOA dues, property taxes, condo insurance premiums, electricity bills, repairs, and improvements. I also saw credits to the tune of $227.52 when I refinanced my mortgage loan back at the end of 2012 and saved $906.81 on my federal income taxes due to itemizing thanks to paying the mortgage interest, among other things. I’ve lost out on $879.14 in interest by buying the condo and pre-paying the mortgage instead of leaving my entire amount of equity in an Ally savings account earning 0.84%. So, one year in, I’ve paid out $13,840.42 to own and live in my condo.
- If I had continued living in my previous apartment, I estimate that I would have paid out $22,618.27 in rent, parking fees, building utilities (water, sewer, gas, trash), renter’s insurance, and electricity, which is $8,777.85 more than I’ve paid out to own and live in my condo over the last year. At that rate, it would take me slightly over 3 years with these numbers to recoup the transaction costs of selling the place.
- Assuming I could sell my place for exactly what I paid for it, I would be out $13,921.98 if I sold it today. I expect staying here to break even (assuming no change in sale price) by February 2015. If the market has truly gone up as much as it looks like it has by the sale prices around me, buying would be cheaper than buying today by $23,846.65.
- The mortgage balance at the end of June sat at $229,752.70. It was originally at $286,000.00 when I bought the place last June. I’ve paid down $56,247.30 (19.7%) of the mortgage balance over that year while still maxing out my 401(k), Health Savings Account, Roth IRA, maintaining my $20,000 emergency fund, and occasionally adding to my taxable investments. That means that, at this time, I am pretty much on track to pay off the mortgage in five years from origination. I also now have about 35.7% in equity and will be pretty close to 50% in equity by the end of 2013.
Now for some charts! Note that these were accurate as of posting and assume only the normal payment for the rest of the year (August 1st payment and on), which is unlikely to happen :)
I am paying SO much less interest than when I first started out last year, especially since the refinance. My first payment was $708.07 in interest. The first payment with the refinance was $527.60 of interest. I’m estimating to pay less than $400 in interest by the January 1st, 2014 payment. It’s been really fun to watch the interest go down each month and the principal portion of the payment go up.
I feel like this chart doesn’t really do justice to the fact that I have paid down over $56,000 of the mortgage in just 12 months. Or very close to $60,000 if you count the pre-payment I sent in with my July 1st regular payment. That is a pretty decent chunk to pay down in just one year. This chart shows how I’m doing against the 5 year payoff balance for each month. As you can see, I’ve paid off enough as of today that I am ahead of schedule through September 1st. With the lump I plan to send in later this month, I should be ahead of schedule through January 1st, 2014.
Today, I’m glad I bought. I love this place so much and it’s turned out to make a good deal of financial sense so far. Paying down the mortgage is pretty addicting too.