Higher rent, record low interest rates, home prices down 20% to 40% –  isn’t it time to consider owning a home?

With consumer confidence down, more people are renting these days than before. Like everything else, rent rates obey the law of supply and demand. The vacancy rate for rentals (apartments and homes) are shrinking resulting in a hike in rent rates nationally, and the Charlotte area has not been speared. According to CNBC, rents have increase by over 6% in 2011 in the Charlotte area and will continue to rise in 2012. Compare the rent rate increase (6%) to the inflation rate (3.8%) and you will soon realize that you are paying more to live in the same place. Analysts predict that the Charlotte area could face an apartment shortage in the coming years, a complete reversal of what was happening less than two years ago when high vacancy rates forced apartment communities to offer up to three months in free rent as an incentive to sign up a new lease. Today, there are no more incentives to rent.

On the housing side, interest rates have been at record lows. FHA rates are currently 3.75% (fixed rate for 30 years)! It has been decades since rates have been that low and that translates into major saving opportunities for those who want to own instead of rent. How much exactly would you save if you own instead of rent? Putting aside the obvious tax benefits homeowners have from by writing off their mortgage interest and property taxes, let’s use an example – if you were to purchase a $140,000 home with a FHA loan today, your monthly payments would be $859 per month (including principal, interest, tax, PMI and insurance). At a reasonable 6% rate (that was the rate in 2008), the same house would cost you $1,043 per month, or $184 more per month. Taking in consideration that home prices are 20% to 40% down from their original level just a few years ago, it is obvious that home buyers today can tremendously benefit from buying a home instead of renting. The average rent in the Charlotte area is $725 per month. That could buy you a $120,000 home. At the bottom of this blog are examples of homes currently for sale in Charlotte.

 There are also programs to help first time home buyers with their down payment and closing costs. Those programs are called down payment assistance programs. Those programs can give you thousands of dollars in funds to help you pay for your down payment  and closing costs. With low interest rates, low home prices and down payment assistance programs, you owe it to yourself to see if you own a home instead of renting. Contact us today to find out what the requirements are to qualify for a home loan. We work with all types of credit and have helped many renters become homeowners in the Charlotte area.