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Updated over 5 years ago,

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3
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Ash Ab
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3
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Am I wrong about renting vs buying?

Ash Ab
Posted

Ok so I'm just trying to think in advance. So I just finished residency and signed an offer for a position to be making 330,00 a year. After taxes, insurance deductions etc Ill be taking home 190k a year. Now I signed an offer for 2.5 years. And I really want to buy a house. I understand you should rent a house first to test the water and make sure you like the job etc etc. Now in the the event that I buy a house I kind of want your opinion on this.

My understanding is that most people don't buy a house and sell it less than a year after buying because they don't have enough equity. But lets compare renting vs buying. Lets say I rent a house 1.5k a month for 2.5 years, that equals to 45k that goes right down the drain that I will never get back. Total net loss 45k...…

On the other hand, lets say for example I use a physician loan with 3.75% interest with no down payment and buy a house for 250k. Monthly mortgage is about 1.5k a month and tax is about 5.5k per year Closing cost that buyer pays is about 3k. Now lets say 2.5 years from now I want to sell it. Lets say house value went down and it is now with 240k and I decide to sell it for 240k I've put in about 45k into the house through mortgage from monthly payments. Take out the closing cost from the original purchase. Take out the 16k in taxes that I paid. Take out the 10k difference in the value that I lost and the 15k in interests Take out 14k in commission fees from selling the house. I have a net loss of about 15k vs the 45k if I were to rent a house.

Am I getting this wrong. If so can someone steer me to the right direction if so?

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