If the only reason you’re still renting is because you think you can’t own a home, think again.
There are lots of great reasons you might choose to rent; a temporary job, you’re in school, maybe you’re considering a move to another part of the country. But if you plan on being in Greater Portland for more than a couple of years, a purchase could be well worth pursuing. Thanks to some incredible loan programs, buying might be easier than you ever imagined too.
Here are five things reasons it’s a better time than ever to buy vs. rent.
1) Low Down Payment Requirements Make Ownership Amazingly Easy
I speak with people all the time who assume a home purchase requires 20% down. Nothing could be further from the truth. 5%-down and 3.5%-down programs like FHA are common (FHA is not a “low-income” program. 40% of all mortgages in the country are FHA loans!), and according to a mortgage broker I like and trust very much, Kim Brown with Carriage House Mortgage in Falmouth, there is currently a conventional mortgage available that requires only 1% down. It doesn’t get much better than 1% down!
2) Interest Rates Are Going Up
I’m not an interest rate alarmist, but when I was looking at buying my first home in 2003, I called my father because I was concerned about the high 6% interest rate I had been quoted on my mortgage. (I had crummy credit at the time.) His advice was, “Buy a home! When your mother and I bought our first home in 1973, we paid 11.5%, and that was a good rate!
My point is, interest rates have been at historical lows for years now. Even if they go up to 5.5%, that is still a terrific rate, but who knows how high they’ll go? If you’re even remotely interested in home ownership, why not get in at as low a rate as possible?
3) Owning is Cheaper Than Renting
According to this article from rentcafe.com, as of February 2017, the average rent for a 2 bedroom, 866 square foot apartment in Portland was $1414. Using the calculator available here, we can see the monthly payment on a $250,000 mortgage is roughly $1641 with taxes and insurance included. Now obviously, you are not going to buy a home in downtown Portland for $250,000 anymore, but you might find one very close by. And when you own your own home, you don’t jockey for parking, you usually don’t climb three flights of stairs to get home, and don’t have to smell your neighbor boiling cabbage anymore. Also, consider this: Mortgage brokers are in the people business (or they should be), so even if for some reason (not-quite-perfect credit, a bit too much debt) you’re not quite ready to buy, they will help you understand what you need to do in order to get ready. And no matter how bad you think your situation is, they’ve seen worse.
4) Renting Gets More Expensive and Offers Zero Return. Owning Builds Equity.
Even if you’re not interested in investing in real estate to make money, just by buying a home, you are making one of the safest investments available. In general, a home will always have value. And in a market like Greater Portland, the chance of a home being worth less than you paid for it, even after just a few years, assuming you maintain it, is pretty low. In short, owning a home in our area is very good bet, particularly when compared to renting for the same amount of time.
5) Multi-Units Are A Great Compromise
Most mortgage lenders will not only loan you money to buy an apartment building at the same rates as a single family home, but will also allow you to count your expected rental income as part of your total income! If you have the right personality, owning a multi-unit can be an amazingly effective way to let tenants help you pay your mortgage, while you build equity and avoid moving “out to the suburbs” if you’re not quite ready for the minivan-and-picket-fence life yet.
If you’re renting and want to own, the easiest way to find out if you’re ready is to call me at 207-799-7600, or email me at firstname.lastname@example.org. I can put you in touch with an honest, reputable mortgage broker who can help you understand how to get out of the rental game and into your own place.