Take a look at the numbers and see why there are very compelling reasons to choose a mortgage payment over a rent payment.
With rental deposits significantly lower than most down payments — not to mention the costs of maintenance and upkeep to consider — the rent vs. buy equation can seem like a tough one to solve. But while saving up for a down payment, or worries about the cost to maintain an HVAC unit, can be intimidating, the full picture can look much different. In fact, those extensive numbers say something else entirely.
Market conditions and rising rents in areas across the country mean that most analysts lean strongly in favor of buying for a large segment of the population. Of course, your decision should be based on your personal financial situation (and your ability to stay in your new home for a while), but there are a few key reasons why you may want to sign mortgage paperwork instead of a lease.
Rates are still offsetting higher prices.
Even with home prices inching up from last year, they don’t wash away the huge cost savings lower mortgage rates offer. In fact, according to a fantastic Trulia report, for households putting down 20%, with plans to stay at least seven years, buying is on average 37.7% cheaper than renting. This is only a 0.5% increase from 2015. Rates would need to increase well over 100% to wipe out the cost savings of buying. Such an aggressive rate hike is highly unlikely.
Buying is better than renting in over major 100 metro areas – Including Nashville! If you think buying is cheaper only in smaller, less densely populated cities and towns, reality says otherwise. In fact, it’s cheaper to buy than rent in more than 100 U.S. metros. Topping the list are cities including Miami, FL, Houston, TX, and Charleston, SC. These areas all offer a cost savings of more than 52% in comparison to renting. Nashville makes the list, too!
There’s no guarantee of stable rental rates.
Nationwide, rents have increased 3.5%, which is a slower pace than real estate prices, but it’s not insignificant — and the amount can vary drastically depending on a variety of factors, making rising rental prices an unpredictable part of your financial picture. In Nashville, though, with so many people moving into the city, rents in many areas have more than doubled in the last 3 years.
