Friday, July 16, 2021 / by Melanie Curley.
As I have written, many times before, real estate markets vary greatly from region to region. Nationally rent prices are going up. It is important to keep in mind when you see statements such as, “rents are up 9.2% in the first half of 2021” according to Apartment List, that this is the national trend and the percentage will differ locally. Rents always go up some in the summer time as seasonal rentals are included as well.
What does this mean for you? If you are renting, you might want to think about purchasing. I know, you may be thinking that buying doesn’t make sense due to the shortage of homes on the market and the competitive nature of home sales that we are currently experiencing. Let’s look at some numbers. If you were to purchase a home at $200,000 with a down payment of 5% and you financed with a fixed rate conventional loan for 30 years at a rate of 3.4% your principle and interest payments would be $842.61. You would still have taxes and insurance to pay above that. If you are paying $1,000 or more a month in rent you may want to consider buying.
Let’s say that $200,000 house was a duplex and you were able to collect $1,000 in rent for the side you are not living in. That rent would cover your mortgage and part of your taxes. Imagine, you could be living rent free!! Waiting to purchase could have a serious impact on your budget. For example, that same house if interest rates were to go up to 5% would now cost you $1,019.96 a month. Waiting can definitely cost you.