Reminder: rents don’t rise when you lock in a mortgage rate.
It’s the end of the year and we’re seeing multiple posts on social channels regarding rental increases. Many of the posts are by local people who are receiving notices that their rents will rise significantly…and very soon.
One of the top benefits is protecting yourself from rising rents, by locking in your housing cost for the life of a mortgage.
Dont Become Trapped
A recent article by Apartment List addressed rising rents by stating:
Rents are up 2.7% year-over-year at the national level. Year-over-year growth continues to fall between the 2.1% rate from this time last year and the 3.4% growth rate from October 2015.
The article continues explaining that:
Despite the seasonal slowdown, rents are still up year-over-year in 89 of the 100 largest cities.”
Additionally, the Urban Institute revealed that,
Over a quarter of renters, or 11.1 million households, are severely cost burdened, spending at least half their income on rental housing.
These households struggle to save for a rainy day and pay other bills, including groceries and healthcare.
Its Cheaper to Buy Than Rent
The results of the latest Rent vs. Buy Report from Trulia shows that homeownership remains cheaper than renting with a traditional 30-year fixed rate mortgage in the 100 largest metro areas in the United States.
The updated numbers show that the range is an average of 6.5% less expensive in San Jose (CA), all the way up to 57% less expensive in Detroit (MI) and 37.4% nationwide!
Know Your Options
Perhaps you have already saved enough to buy your first home. A nationwide survey of about 24,000 renters found that 80% of millennial renters plan to eventually buy a house, but 72% cite affordability as their primary obstacle. Aside from affordability, one in three millennial renters have concerns about their credit scores, and another 53% said that a down payment is an obstacle.
Many first-time homebuyers who believe that they need a large down payment may be holding themselves back from their dream homes. In many areas of the country, a first-time home buyer can save for a 3% down payment in a few short years. You may have already saved enough!
Dont get caught in the trap that so many renters are currently in. If you are ready and willing to buy a home, find out if you are able by getting pre-qualified with a local reputable mortgage officer.