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Personal Finance Concepts - P 3 IP Dear daughter, before you make any decision is it very important to consider all options available. First, as you landed a great job making $ 50, 000 a year in New York, on the one hand, your salary is only a start-up, and youll certainly be earning much more in the future. However, on the other hand, as you are going to start your own adult life, you certainly want to live separately. I appreciate and respect your decision, and, the only thing I want to tell you is to weight carefully all the pros and cons of buying a small starter house or renting an apartment. This is extremely important especially in terms of the present mortgage crisis, and, therefore, Id like you to read the research I've done for your convenience. So, although $ 50, 000 a year is quite a high start for such a young girl like you, but, after all NYC income tax, federal and state taxes, Medicare, and Social Security you will have approximately $ 3, 000 a month to spend.
Naturally, you will have your own expenses, such as subway (unlimited metro card will cost you about $ 76 /month), the bills (approximately $ 40 /month for electricity and another $ 20 /month for gas), internet (about $ 40 /month), the food (I believe, it will cost you another $ 250 - 300 /month), entertainment (as you know, the movie costs about $ 12), and some other expenses the girls do like to spend their money on (such as clothing, beauty-shops, sport, and many others), however, for our convenience lets assume they will cost you another $ 300 - 400 /month. In such a way, lets suppose that all your expenses will be approximately $ 1, 000 /month. Now, as we remember that your monthly salary will be approximately $ 3, 000 a month after all taxes, after deducting all your expenses youll have about $ 2, 000 to spend. So, lets calculate whether it will better to rent or to buy a small starter house, if you have $ 2, 000.
month left. On the one hand, buying an apartment has its advantages, as you will feel privacy and comfort in your house, you have also some financial advantages and tax benefits (as you will be able to deduct mortgage interest and property taxes on your income statement), you will also have better maintained and better equipped apartment, and some other benefits. However, the disadvantages of buying a house are large initial investment (as you will have to pay at least 10 % as your down payment on a small condo), and closing costs that are associated with the real estate purchase, as well as mortgage points, attorney fees, insurance, and some others. They may cost you up to $ 5, 000 - 20, 000 depending on the type of apartment youve chosen. In such a way, you will need to have at least $ 75, 000 in your bank account to start to consider buying an apartment in New York City.
Purchasing an apartment also involves the long-term commitments you will need to make. At the same time, renting an apartment also has its advantages and disadvantages. The advantages are - renting is an easier and quicker process, you have no mortgage, and, therefore, have no financial, legal, or psychological long-term commitment, and have limited responsibilities and obligations. However, renting, naturally, does not go towards equity, and sometimes renting units are not as well maintained and equipped like condominiums. Now, lets try to understand, based on your affordable monthly payment (which is about $ 2, 000 /month), in what price range should you look, and what houses are available for sale in your price range. According to various real estate web sites, such as web and web the cost of a small starter house in New York is extremely high.
For example, a small studio in New York NY Murray Hill (34 - 42 East 5 th Ave) will cost you $ 325, 000 (web). What concerns safety, I believe that Bronx is quite safe place to live in. So, an average apartment to rent will cost you approximately $ 950 - 1, 200 /month. For example, renting an apartment on 3143 Waterbury Avenue (1 Bed, 1 Bath, 900 Sq. Ft. ) will cost you $ 1, 100. Renting an apartment on 2228 Adams Place (1 Bed, 1 Bath) Bronx, NY 10457 will cost you $ 1, 150.
New Construction Located in the Belmont section of The Bronx will cost you approximately $ 1, 200 /month. Now, what concerns the options of purchasing the apartment in this area, they are as follows. The average house available for sale ranges from $ 180, 000 up to the infinity. However, there are several perfect variants for you to consider. For example, just have a look at a nice apartment (Bronx, NY 10467, with one bedroom and one bath) $ 189, 999 (web). According to the advertising, this home is a one bedroom that can be easily converted into a Junior 4, with a sunken living room with fireplace, raised dining room, new modern kitchen, updated bathroom, high ceilings, lots of windows, lots of sunlight.
It is close to all transportations, close to great schools, and close to parks. Now, lets calculate, using mortgage calculator (web). You will have to take a loan amount $ 190, 000. Loan term 30 years.
The mortgage rate will be (according to web 30 Yr Fixed - 5. 63 %). Even if the interest rate will be 5. 75 %, the estimated monthly payment will be $ 998. The only thing you will have to do is to find 10 % Down Payment ($ 19, 000). In order to succeed, you might consider either saving from your salary, or borrowing money, or accepting it as my New Year present. Therefore, taking into account all our calculations, you should think about purchasing an apartment rather than renting it. References Harmon homes Website. (n.
d. ). Retrieved December 29, 2007, from web Mortgage Calculator. (n. d. ). Retrieved December 29, 2007, from web Mortgage Rates. (n.
d. ). Retrieved December 29, 2007, from web Real Estate. (n. d. ). Retrieved December 29, 2007, from web
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Research essay sample on Real Estate Long Term
