As November goes into full swing, we are planning to close on our refi on Wed of this coming week. We were able to lock into a lower interest rate of 4.125. We'll see how much that saves us. They said our mortgage PLUS tax and insurance should be somewhere in the ball park of $1075 a month. That is incredible. We've actually paid $43k into this house as downpayment and extra principal + over $20k in interest payments over these last two years + $30k for renovations.
That's right... over $20k in interest payments alone and almost $100k put into a house in 2 years... I am kinda glad we got a lower interest rate. It cost us a couple thousand to refi, but that gets rolled into our new mortgage. Oh well. Owning a house definitely has a LOT of cost up front, but if it will definitely take a bit of time for it to pay for itself.
Had we just rented a place for $1500/month for the past two years, it would have been: $36k. But instead we paid about $1414/month of which we got about $300 went into principal and $100 came back after taxes... Our house is currently worth about $233k according to Zillow. If we sold today, we would have lost about $31k. Which would have been about the same as renting a place for two years.
If we bring this calculation out to 5 years... based on the same assumptions: 1500/month rent would be about $90k.
On our current 5.5% interest rate, we would have paid about $45k in interest payments + $19k in principal + $18k in insurance/tax...
If there was appreciation on home prices in five years, my estimate about $269k... we should be ahead by about $21k... compare that to a complete loss of $90k had we rented...
If there was no appreciation on home prices... if in 5 years, it stayed at current Zillow estimate of $233, we would have lost $15k... not bad compared to $90k if we just rented.
Home prices would have to decline to $158k in order for us to be equal to renting. I definitely do not believe this will happen considering all that money the mint is printing. We probably get inflation before that happens.
Of course I didn't take into consideration this new interest rate and new mortgage rate. But had we continued it still would have made sense to buy.