Buy a Home and Subsidize Your Retirement

We all know how historically low interest rates have been over the past few years. The federal Government has been pumping money into the system, and although they have been rather selective, banks have been lending at very affordable rates.

Along with this trend has been the spike in rental prices. As fewer people could buy and more needed to rent, rental property prices started to go up. This has also been influenced by the unemployment rates, which have been higher than usual as well, although they are starting to pull back. Despite this, many economists believe that the level of unemployment might remain higher than what we've been used to.

So while rates are still lower than usual and home prices very attractive, you still have time to jump in and take advantage of some serious savings. The following scenario compares renting vs. buying and is based on an actual active listing located at 2957 Raking Leaf drive, Abingdon, MD 21009.

What does this mean? Basically, at today's interest rates (4.5% rounded up from 4.44%), according to Bankrate.com, you will save $125.42 per month buying instead of renting. If you were to invest those savings and only received an average of 6% over the next 30 years, you would have over $118,985! The best part is that this doesn't even factor in the home equity you could expect to gain over that time frame. 

While this strategy would only represent a small portion of your retirement planning, it will definitely help. It could also be applied to the idea of saving for your childrens' college, and we will address that in the coming weeks. Think about taking advantage of the rent vs. buy disparity and save money for the long term. 

2957 Raking Leaf Drive, Abingdon, MD 21009