Is it cheaper to buy or rent?
My clients in Asheville, NC always ask me if Is it cheaper to buy or rent?. The answer is almost always: buy! As of the time of this writing rent prices are through the roof in Asheville, with the average one bedroom apartment reaching almost 1,000 a month in rent, while the average home sale is around $220,000. (excluding luxury homes)
Several factors are to blame for rent prices being so high, and the biggest is demand. Asheville and most of the surrounding area has a less than 1% occupancy rate with rentals, while the inventory for homes less than 250,000 is dwindling, landlords are taking advantage of the increase in rental demand by raising prices.
So okay, is it cheaper to buy or rent?
A simple mortgage calculator shows the payment on a 220,000 home at 4% interest with no money down and 1500 a year in taxes and insurance is around $1,141.98. The real question is, would you rather live in a one bedroom apartment or a $220,000 house while adding equity to your home, taking advantage of appreciation in your home value, possibly renting a room to offset the cost of the mortgage, and possibly taking advantage of the interest tax deduction available to some homeowners?
But that is a little more than what I’m paying in rent! So is it cheaper to buy 0r rent? The cost of the home is easy to change. Many folks can get a smaller home that’s still more room than what they’d get with a rental, never have to worry about pet fees, they can paint and customize, and more importantly you own the house. The real question you should ask yourself is “why should I be paying someone else’s mortgage?”
What about PMI?
“Oh Shawn, but what about PMI?!?” PMI is something I don’t encourage anyone to pay. If you don’t have 20% down to qualify for a conventional mortgage, there is hope. I know tons of first time home buyer programs, VA, FHA, USDA and other lending options that you could possibly qualify for. Even if you’re not approved right now, let’s talk with your lender to put you on the track to getting pre approved so you can stop throwing away money on rent!
It’s my goal to get everyone into a home of their own.
You can use our property search at Closing Tree dot com to get an idea of what’s available on the market, and just what you can get for often less than what you’d pay in rent. http://closingtree.com/property-search/