Whether you’re currently renting, looking for a new place, or debating between renting and buying, there’s one thing that’s clear: renting is costing you more money. As your rent continues to increase year after year, the cost of homeownership stays consistent with your mortgage rate. Ready to reconsider renting? Keep reading.
Mortgage rates are at historic lows and the housing market is rebounding. Although the Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage are currently around 4.2%, Freddie Mac is projecting that rates will increase to 5.2% by this time next year. Consider these three facts from Freddie Mac if you are ready to consider buying vs. renting:
1. On average, buying a home is 30% cheaper than renting across the nation in the 100 largest metro areas.
2. Today’s rent payments are rising faster than incomes. With today’s low fixed interest rates, your monthly payment for a mortgage will remain the same for the life of the loan.
3. Either way, you are paying a mortgage. “Households must consume housing whether they own or rent. Not even accounting for more-favorable tax treatment of owning, homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord plus a rate of return.” — Joint Center for Housing Studies at Harvard University
Renters are then, unsurprisingly, more “cost-burdened” than homeowners, according to the same Harvard Joint Center for Housing Studies report. About half of all renters were “cost burdened”, paying more than 30% of their income for housing, compared to less than a third of homeowners. 28% of renters paid more than half of their incomes for housing. Part of this may be due to underlying economic realities for these two groups. Homeowners, by definition, have enough savings and income to buy their homes, while renters tend to have fewer such resources. The Harvard study found that nearly half of the increase in renter households came from households earning under $30,000 per year. “Affordability aside, homeownership provides you a chance to build equity and stability over time. Timing is everything in a market where we expect rates and home prices to rise,” says John Inzeo, Vice President of Wisconsin Mortgage Corporation. “Visit us online and check out our Mortgage Calculator to create your own custom analysis. Contact a Loan Officer for personalized analysis and information on current programs being offered. Our FREE/NO-OBLIGATION pre-approval is a great way to get started. “ When you’re ready to discuss your mortgage options, call your Mortgage Lender with Wisconsin Mortgage Corporation. A trusted source in your buying process, Wisconsin Mortgage Corporation can help you finance your dream home.
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