Recently one of the major real estate web sites performed a survey of the 100 largest metro areas in the country. The purpose of the survey was to help people decide whether to purchase a home or rent.
In each of the 100 metro markets the survey showed it was cheaper to purchase a home than to rent. In some areas the cost of home ownership was 50% less than renting. On the other side of the scale it was only 20% cheaper to purchase. Only 20% less! On average it will cost you 37.7% less to purchase a home than to rent.
The Federal Reserve Bank is expected to raise interest rates this year. But rates would need to be raised considerably to offset the advantages of purchasing over buying. What should worry you more than rising interest rates, should you decide to purchase a home, are rising home prices.
Overall, the benefits of low interest rates have been countered by rising prices of homes. If you can afford to make a 20% down payment, it will cost you 37.7% less to purchase a home than to rent similar housing. Interest rates would need to double to negate the financial advantage of purchasing a home.
So – should you purchase your next home or rent? The benefits of homeownership are obvious. You will receive tax benefits from deducting your mortgage interest and property taxes. You won’t need to move if the landlord decides to sell the property. If you want to paint or remodel to fit your needs and desires, you can.
But there are also benefits to renting – repairs are the landlord’s responsibility. You won’t need to save a large down payment, just the security deposit.
Talk to your financial advisor to get advice. Speak with a mortgage broker to find out the true cost of purchasing. Then speak with an experienced Realtor to help you find you dream home.