A recent study has found that home buying continues to remain a cheaper option than renting, a trend that has remained steady since 2012. The data indicates the potential for significant savings for homebuyers in the top 100 major metro areas in the US.
Where Buying a Home is Cheaper than Renting
The data comes from the real estate firm Trulia, whose recently released study found that homebuyers saved 37% on housing costs when compared to renting. The percentage is an average calculated from the savings found in the top 100 metro areas in the United States. For residents of Texas the savings were even more significant, as the top four metro areas in the state logged savings higher than the national average.
According to the study, the cost was 40% cheaper on average in Austin, 47% cheaper in Dallas, 50% cheaper in San Antonio, and 53% cheaper in Houston when comparing the costs of homeownership to renting.
Trulia’s analysis factored in such things as closing costs, down payments, security deposits, rent appreciation, and more on comparable properties in order to calculate the percentage savings. The study also assumed that new buyers would stay in their homes for at least seven years, put 20% down and got a 3.7% mortgage interest rate.
Buying is Cheaper, But Are You Ready?
The data from Trulia does indicate buying is cheaper than renting, but buying a home is a major investment that requires all buyers to be prepared. Before you cancel your lease and sign a mortgage, the online publication Business Insider recommends the asking yourself the following questions:
1. Is your emergency fund separate from your down payment?
You can never have enough money in your savings account when it comes to buying a home. Also, the money for a down payment should always be separate from any emergency savings fund. The emergency fund will come into use if you need more furniture, extra moving equipment, or decide to upgrade parts of your house.
2. Have you saved up more than the bare minimum for a down payment?
As a general goal for how much to save, set a target amount of 20% of home cost to spend on the down payment. When you hit your 20% goal, continue saving. Surprise costs can be common when buying a home, and if you are one the 50% of new, first-time homebuyers projected for 2017, expenses such a closing costs, inspection fees, and insurance that expected by regular homebuyers could take you by surprise. First-time buyers are also 40% more likely to exceed the initial budget they set when buying a home, according to a report by Zillow, another real estate firm.
3. Do you have a good credit score?
Technically you can buy a home with a low credit score, but you will pay for the “privilege.” A low credit score can mean significantly higher monthly payments, which could stress an already tight budget. Check your credit score early in the buying process, and if you don’t believe it is high enough, set a goal and work toward increasing your score before you apply for a mortgage.
Choose Plantation Homes for your Homebuilding Needs
Plantation Homes can help to make your dream of being a homeowner a reality. With more than 25 years of experience in the Houston and Dallas-Fort Worth markets, Plantation Homes has experience putting qualified buyers in quality homes.
Making our homes even more affordable for the average buyer are energy-saving features built into every Plantation home. All new homes feature EcoSmart technology, allowing for an energy efficient new home that can help to save money on utility bills. Plus, all new homes from Plantation come with a warranty, allowing you to enjoy your home worry-free for a few years after purchase.
Contact a sales counselor today to learn more about constructing your new home with Plantation Homes.