Buying Is 38% Cheaper Than Renting
Buying is 38% cheaper
than renting. That statement reflects Trulia’s Winter Rent
vs. Buy Report. “Although the gap between renting and buying is
narrowing across the U.S., homeownership is still 38% cheaper than renting.”
When evaluating buying a
home vs. renting you need to understand the local math. Although the national
average is 38% cheaper for buying vs. renting, the range across the country is
from 5% cheaper to 66% cheaper.
The Trulia report
concludes that there is nowhere in the US that buying a home is not cheaper
than renting. However, the percentage of difference does vary widely. That is
because there are variables that depend on local circumstances such as:
- Local home values
- Local rents
- Mortgage
interest rates
- Rates of value
appreciation
If you really want to
understand the detailed numbers go to the full report.
You can also go to
Trulia’s Rent vs. Buy Calculator that allows you
to plug in your local variables.
Borrower’s credit score is
another factor you need to take into account when evaluating your situation.
Mortgage interest rates are perhaps the most important variable in the buy vs.
rent calculation. One of the factors that affects interest rates the most is
the borrower’s credit score. The lower your credit score the higher the
interest rate you will pay.
The monthly payment on a
$200,000 loan for 30 years increases by $60.27 for every 0.5% added to the
interest rate. That means the decision about whether to borrower using a variable
interest rate (such as an ARM) or a fixed interest rate over the life of the
loan is very important.
The Trulia report also
evaluates the “tipping point” for interest rates that will cause renting to be
cheaper than buying. For the national average that leads to the 38% figure the
mortgage interest rate would have to rise to over 10%. However, you should look
at local factors involved for a home using the Rent vs. Buy Calculator.
You can follow this link
for the current Forbes.com interest rate forecast. You
can also find current mortgage interest rates at bankrate.com.
Current indicators are
that both home prices and interest rates are going to rise steadily over the
next five years. That is good news for potential buyers, and means now is a
good time to buy. However, if you’re hoping to become a homeowner anytime soon
use these tools to do some research.
Information courtesy of
Orlando Realtor Teri Isner.
Teri Isner is the team
leader of Orlando
Avenue Top Team and has been a Realtor for over 24 years. Teri
has distinguished herself as a leader in the Orlando FL real estate market.
Teri assists buyers looking for Orlando FL real estate for sale and
aggressively markets Orlando FL homes for sale.
You deserve professional
real estate service! You obtain the best results with Teri Isner plus you
benefit from her marketing skills, experience and ability to network with other
REALTORS®. Your job gets done pleasantly and efficiently. You are able to make
important decisions easily with fast, accurate information from Teri. The
Orlando Avenue Top Team handles the details and follow-up that are important to
the success of your transaction.
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Labels: buying vs renting, Orlando avenue top team, Orlando fl real estate, teri isner
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