Should you rent or should you buy?
It’s a personal choice, and lifestyle considerations are always a factor. However, with soaring rents and historically low interest rates, from a financial standpoint, buying a home today may make more sense. Here’s why.
Rents have reached all time highs
According to the U.S. Census, Seattle has seen the steepest rent hike among major U.S. cities. Bellevue was even higher.
Bellevue’s median rent is now higher than San Francisco.
Zillow reports that the median monthly rent in Bellevue is $2,470; Seattle is $1,827.
Buying is now more affordable than renting
The percentage of income homeowners pay for their mortgage has trended down significantly from the 1980s when interest rates were high. At that time, 40 percent of income went to mortgage payments.
Mortgage rates now are at historic lows.
Buying is more affordable than renting. Renters in our region spend 31 percent of their income on rent. Homeowners spend just 22 percent of their income on mortgage payments.
It’s easier to get a loan
Mortgage lenders are relaxing their credit requirements. In spring of 2014, 33 percent of home loans were for borrowers with a credit score below 700.
FHA loans are available even if buyers have a FICO score lower than 580.
Homebuyers don’t need to put 20% down. Among the options are programs offered by Fannie Mae and Freddie Mac that require just a 3 percent down payment.