If you’re considering purchasing a new home this year and you are currently renting but may have been reluctant because of rising home prices and the increase in mortgage interest rates there are a few things you should know and consider before abandoning all plans for purchasing a home this year.
Owning a Home is More Affordable Than Renting
According to the latest data from several different real estate experts owning a home is more affordable than renting in the majority of the United States currently. The 2022 rental affordability report has stated that owning a median-priced home has shown to be much more affordable than the average rent price on a three-bedroom property in 58% of locations across the country.
The analyst company CoreLogic recently also provided insight into the affordability of owning versus renting across the country currently in what they title the Single-Family Rent Index. In this report, CoreLogic states that rent prices had the fastest year-over-year growth for the last 16 years when looking at the numbers for the month of November each year.
The principal economist at CoreLogic noted that this data shows that single-family rent growth has hit a sixth consecutive record high in November 2021 and it was more than three times compared to the year earlier. Many real estate experts are expecting rent prices to continue to grow by significant amounts for the near future especially as the job market is expected to continue to improve.
If you Want to Buy a Home in 2022 it is Still a Very Promising Investment
While home prices have seen a large increase and mortgage rates are rising, monthly rents are also seeing significant increases as well. If you are hoping to buy a home over the next year do not let the rising rates of mortgages and the increasing prices of homes detour you from your plans of investing in a home.
Even though mortgage rates are higher than they were a year ago, they are still in a very good place as compared to just a few years prior. It is still a good time to get in on a low mortgage rate and you would be surprised at what your monthly mortgage payment would be on a current home. Monthly mortgage payments are still much lower even on homes that have a higher price tag. And in many locations mortgage payments are lower than the average expected to rent for a bigger property that you actually own.
In addition to having the same or lower monthly cost as current rent, you can also lock this payment in over the complete life of the loan with a fixed-rate mortgage. Continuing to rent means that you leave yourself subject to increasing rent prices over the next few years. It is very rare to lock in a guaranteed rental payment for more than a year.
Experts say that purchasing a home now and doing so on a fixed-rate mortgage could save you tens of thousands of dollars over the life of the loan as compared to renting for that entire time.
If you are currently trying to decide whether you should purchase a home or continue renting make sure to look at your full financial picture and if it would actually truly benefit you to walk in one housing cost price. It is a good idea to work with a real estate professional and get an idea of what your options could be for homeownership right now.