A new report took a close look at rental affordability and found that it’s cheaper to buy than rent in a majority of the country.
The ATTOM Data Solutions Rental Affordability Report took the median price for a three-bedroom home in 915 counties and compared the costs to rent a similar setup. The company said that it’s more affordable to buy in 63% of the surveyed locations.
The revelation may be more significant given the fact that home price increases have not slowed down. Home prices are also rising faster than wages in many parts of the country, yet home affordability continues to expand.
One big reason why home affordability is real for more Americans is due to historically low mortgage interest rates. Rates have fallen below 3% and are keeping the costs of owning a home down despite the increases in home prices.
With so many unanswered questions for 2021, experts still believe that buying a home is a more tenable path forward for many families.
Owning a home allows families to escape the uncertainty of unexpected hikes to their monthly rental cost. Once you obtain a fixed-rate mortgage, you’ll know exactly how much you will have to pay each month.
And unlike the rental payment, your monthly mortgage goes toward paying off mortgage debt, which increases your equity. Equity is calculated by subtracting the balance on the loan from how much the home is worth. As prices continue to rise, homeowners can accumulate equity at a faster rate.
Through gained equity, homeowners have the flexibility to refinance their mortgage down the road with a lower rate and take advantage of a cash-out refinance. This loan empowers you to leverage the equity in your home to take on a new loan, which you can use to pay off debt or to pay for a dream home renovation.
Financing a home at today’s rate may not always be an option. While low rates are expected to stick around, today is a unique opportunity to purchase a home at an extremely low rate. These savings will add up each month and for the life of the loan, adding up to tens of thousands of dollars on money saved through smaller financing costs alone.
Homeowners can also benefit from additional savings through tax deductions. Property taxes and other home-related expenses can be used for substantial tax write-offs as well.