• CMG MORTGAGE, INC. NMLS #1820

Rent vs. Buy: 3 Questions to Consider

  • November 17, 2016

Do you build equity with every home purchase?  Is renting just throwing money away?  How long do you have to stay in a home to build equity?  Are rents more stable than mortgage rates?

In a recent Trulia study, statistics report “For households who move every seven years and can afford to put 20% down, it’s 37.7% cheaper to buy this year.”  Buying a home is cheaper than renting in the country’s 100 largest metro areas.  When you are making the choice between renting or buying your next home, ask yourself these questions first:

1.     How long are you planning to stay in the location?

To build equity in a home, you need to stay more than two or three years.  The average homeowner stays in their home about seven years.  If you have a move coming up or are new to an area, you may want to wait to buy.

2.     Are you prepared for the rising cost of rent?

Apartment rents are growing exponentially, increasing an average of 4.6% in 2015, the fastest rate since 2007.  Even with a federal rate hike on the horizon, the FOMC would have to raise rates aggressively to really swing the mortgage market.  Rising costs of homes are more likely to offset the market than mortgage rates.

3.     Does the math add up?

Have you saved for a down payment?  Have you explored all the down payment options?  Are you able to afford homeowner association dues, insurance, property taxes*, utilities, repair, and upkeep? 

 

Here’s a helpful equation:

 

Monthly take-home pay after taxes – (monthly debt payments + monthly expenses) = what you have left to spend on a mortgage and homeowner’s expenses.*

According to Trulia, it is still cheaper to buy than rent this year compared to last year.  The recap reads, “While rates have dropped significantly compared to last year, rising prices have eroded much of the financial benefits of lower rates that would accrue to homebuyers. Homebuyers should also be more concerned about prices outpacing rents than any possible rate hike by the end of the year.”

 

*Please consult a tax advisor for more information.

 

Sources: Trulia, Wall Street Journal, New York Times

Cindy MacDonell
Senior Loan Officer
NMLS # 316198
Branch NMLS # 1270689

Cindy MacDonell

PHONE: (707) 781-8185
cmacdonell@cmgfi.com

APPLY NOW
© CMG Financial, All Rights Reserved. CMG Financial is a registered trade name of CMG Mortgage, Inc., NMLS ID #1820 in most, but not all states. CMG Mortgage, Inc. is an equal opportunity lender with corporate office located at 3160 Crow Canyon Road, Suite 400, San Ramon, CA 94583 888-264-4663. Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act No. 4150025; AK #AK1820; AZ #0903132; Colorado regulated by the Division of Real Estate; Georgia Residential Mortgage Licensee #15438; Illinois Residential Mortgage Licensee; Kansas Licensed Mortgage Company #MC.0001160; Massachusetts Mortgage Lender License #MC1820 and Mortgage Broker License #MC1820; Mississippi Licensed Mortgage Company Licensed by the Mississippi Department of Banking and Consumer Finance; Licensed by the New Hampshire Banking Department; Licensed by the NJ Department of Banking and Insurance; Licensed Mortgage Banker – NYS Department of Financial Services; Ohio Mortgage Broker Act Mortgage Banker Exemption #MBMB.850204.000; Licensed by the Oregon Division of Financial Regulation #ML-3000; Rhode Island Licensed Lender #20142986LL; and Licensed by the Virginia State Corporation Commission #MC-5521. CMG Mortgage, Inc. is licensed in all 50 states and the District of Columbia. Offer of credit is subject to credit approval. For information about our company, please visit us at www.cmgfi.com. To verify our complete list of state licenses, please visit www.cmgfi.com/corporate/licensing and NMLS Consumer Access (www.nmlsconsumeraccess.org).