Rent vs. Buy - Start Packing!

There are studies being done right now that are telling us taht people who are on the verge of buying a home need a little extra explanation as to why right now is the right, if not best, time to buy a home.  It is cheaper, now, to buy a home that it is to rent a home.  The chart below illustrates the flow of mortgage payments as compared to market rents since 1988.  For the first time in that time period, the payment on a mortgage for a median purchase price is actually less than it is to rent.  And let's not forget to consider the tax write off you get as a homeowner paying mortgage interest and property taxes.

As you can see, when the market hit it's height in price and interest rate, it made more sense, from a budget stand point, to be renting.  But now that the home prices and interest rates are at their current levels, the opportunity to own a home has never been better or more affordable.

A recent report done by TD Bank shows that the aspirations of young people to own their own home are still very much alive.  A majority of renters between the ages of 18 and 34 WANT or intend to buy a home. 

They're just afraid.  Of what?  Let's face it, the media doesn't sell advertising if they report sunshine, lollipops and rainbows.  Fear sells and one of the number one categories of reporting in today's news and media outlets is the "housing crisis."  Does it still exist?  Depends on who you ask.  For the purpose of this post, let's focus on the young, soon to be First Time HomeBuyer.  You have some money saved up (FHA requires a down payment of 3.5% of the purchase price and for those who qualify and wish to purchase in a rural area, the USDA still has a No Money Down program), home values are incredibly low, interest rates are at an all time low, and rents just keep going up.  You have a small family started, you need more room, and the landlord is telling you that you can't paint your daughter's room pink or you can't put that little swing set up in the yard.  Meanwhile, there are homes that you can afford, at interest rates that will allow you to pay less than your current rent.  It's time to start packing.  The quality of real estate and mortgage professionals has increased over the last several years due to attrition, licensing requirements, and plain old fashioned hard work and professionalism.  They're out there waiting to serve you and put you into a home you can afford.  Now is the time!  Don't be afraid!