I am writing this letter to the editor in response to a Jan. 22 article that was well written Jimmy Sailors. However, I strongly disagree with many of the statements made by Scott Beaulier, executive director of the Manuel H. Johnson Center for Political Economy in the Sorrell College of Business at Troy University. In the article, Beaulier states that you are not “throwing your money away” renting unless you can commit to home for 10 years or longer. That notion is completely inaccurate.
First of all, this housing “downturn” is only temporary -- maybe three to five years of unstable prices and we are already three years in. Most economists that I read forecast a turnaround nationally in one to two years from now. But that is nationally, not locally.
Southeast Alabama is a great place to live and buy a home for many reasons. I am a local mortgage lender and I would like to provide an example of a scenario that was very recent. I will keep the names involved confidential for privacy reasons.
I received a referral from an agent I work with for some buyers who were currently renting a townhome for $875 a month. They wanted to buy a home using the buyers VA benefits to get a VA mortgage. They found a home with three bedrooms and two baths that was new construction and negotiated price of $176,000. At the time, I was able to secure an interest rate of 3.75 percent on a 30-year fixed VA loan. So the principal and interest payment was $815 a month. Then you add taxes of $62 a month and home insurance of $45 a month, so the total house payment is $922 a month -- so for $47 more dollars a month, you own your own home.
Please tell me this doesn’t make sense.
On another note, Beaulier is way off. We should be encouraging people to buy homes. Let’s take another look at my previous scenario. These buyers purchased new construction. So I am estimating the cost to build this home is $150,000. This means this builder just put $150,000 into our local economy. This builder had to hire subcontractors for all the components of the house; he had to purchase materials from local retail places, paid wages and so on. All of these expenditures add dollars to our local economy.
Tom Renshaw
Dothan
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