In nearly every major housing market in the nation, buying a home makes much more financial sense than renting, if individuals are willing to stay put for a few years, according to a recent survey by Zillow, an online real estate database.
Specifically, in over 75 percent of the 200 markets surveyed, homeowners would reach that "breakeven point," in three years or less. Individuals in Miami, for example, have the chance of achieving that goal by staying in their home for 1.6 years.
"Historic levels of affordability make buying a home a better decision than ever, especially considering rents have risen more than 5 percent over the past year," Stan Humphries, chief economist for Zillow said in a CNNMoney article.
Zillow's first buy-versus-rent analysis took into account all home ownership costs, including down payments, closing costs, mortgage payments, property taxes, utilities and maintenance costs. Also, projected home price appreciation, tax deductions, inflation and rent increases were taken into account.
Of the cities surveyed, the markets that would take the longest amount of time for homeownership to pay off was San Jose, California, with 8.3 years being the average break even point. Honolulu, Hawaii had a six-year breaking period while San Francisco, California slid in at 5.9 years.
These findings support what this blog has previously written about, in that rising rents, record-low mortgage rates and falling home prices make homeownership seem more important to prospective buyers.
As such, lenders would be well-advised to invest in mortgage loan software, to properly manage any new borrower requests. In addition, using an amortization calculator can ensure that the monthly payment plans created will be acceptable to both parties.