Renting makes sense for many people, especially those just starting out in a career, establishing better credit, or expecting to move in the near future. But for those who are thinking about buying a home – and have good credit (above 620, for example) – now could be an opportune time to make that move.
The benefits of home ownership are well-known - the pride of ownership, the chance to build equity and savings, and the freedom to control your surroundings and be near good schools. These are all good reasons to buy a home.
But rising rents and low interest rates make home buying even more attractive now. According to the U.S. Department of Housing and Urban Development, in 27 North Carolina counties, average rent for a three-bedroom house exceeds $1,000, and is higher than $1,100 in the five largest counties. A new Trulia report states that homeownership is 35% less expensive than renting nationwide, mostly due to low interest rates on 30-year, fixed-rate mortgages.
But the window on the best time to buy could be closing.
While interest rates are still low, they are rising steadily. For every 1 percentage point rise in interest rates, your buying power decreases by 3% or more. For example, a 1% increase in rates on a $150,000 home drives your mortgage payment up $86 per month.
Second, home prices are also steadily rising. According to the Federal Housing Finance Agency (FHFA) Home Price Index, average home prices across North Carolina rose 2.46% last year. This year, home prices seem to be moving even faster – the S&P/Case-Shiller US National Home Price Index reports home prices in the Charlotte metro area jumped almost 1% in March alone!
So is now a good time for you to stop renting and start owning? Think about this: if you are paying $850 a month in rent, that’s $10,200 a year you’re putting in someone else’s pocket. You’re actually still paying a mortgage – just not yours! Buy a home and that $10,200 goes into a tangible asset that you own.
Buying isn’t for everyone and only you will know if it makes good financial sense for you. And if you determine buying a home is your goal for this year, check out our NC Home Advantage Mortgage™ with down payment assistance to see how we can help you get there!
