Good news for consumers currently on the fence about the benefits of homeownership. In keeping with trends over the past few years, home buying remains a cheaper option than renting.
Buyers in the top 100 major metro areas across the United States have the potential for significant savings over renting, according to new data from a real estate research firm.
Where Buying a Home is Cheaper than Renting
A recent study released by the real estate firm Trulia, concluded that homebuyers can save 37% on housing costs when compared to renting. To calculate the average, Trulia aggregated rental and buyer data from the top 100 metro areas in the United States. In the state of Texas, the top four metro areas logged savings higher than the national average.
When comparing the costs of homeownership to renting in Texas metro areas, the cost was 40% cheaper on average in Austin, 47% cheaper in Dallas, 50% cheaper in San Antonio, and 53% cheaper in Houston.
Trulia’s analysis factored in such things as closing costs, down payments, security deposits, rent appreciation, renter’s insurance and more on comparable properties to calculate the average savings for homebuyers. The firm also assumed new buyers would stay in their homes for at least seven years, put 20% down and receive a 3.7% mortgage interest rate.
Buying is Cheaper, But Are You Ready?
Just because there is data indicating buying a home is cheaper than renting doesn’t meaning that homeownership is the best option for all people. Buying a home is a significant investment, and potential buyers should ensure they are prepared to undertake both the financial costs and time management costs needed to buy a new home. In order to be sure you are ready for homeownership, online publication Business Insider recommends asking yourself the following questions:
1. Is your emergency fund separate from your down payment?
If your answer to this question is “What emergency fund?” then now may not be the best time for you to buy. When it comes to buying a home, you can never have enough money in your savings account. Keep any money for a down payment separate from your emergency fund. The emergency fund should only come into use for emergencies, not if you find yourself wanting to spend more on your down payment than previously planned.
2. Have you saved up more than the bare minimum for a down payment?
Ideally, new homebuyers should be able to pay 20% of home cost as a down payment. Once you hit your goal, continue saving, because a down payment isn’t the only cost you need worry about when buying a home. Unforeseen expenses are common when buying a home, and if you are one the 50% of new, first-time homebuyers projected for 2017, you don’t want to be caught off-guard. Typical expenses such closing costs, inspection fees, and insurance, are expected by seasoned homebuyers, but could take the unprepared by surprise.
In fact, First-time buyers are also 40% more likely to exceed the initial budget they set when buying a home, according to a report by real estate website Zillow. It’s always better to have some wiggle room.
3. Do you have a good credit score?
If you have a less than ideal credit score, take time to work toward raising it before buying a home. Be sure to check your credit score early in the home buying process, as scores can fluctuate. True, you can buy a home with a lower than ideal credit score, but you will pay for it. New buyers with a low credit score typically must make higher monthly payments, which puts an obvious stress on your budget.
Choose Wilshire Homes for Your Homebuilding Needs
Wilshire Homes can help to make your dream of being a homeowner a reality. With more than 25 years of experience in the Austin and San Antonio markets, Wilshire Homes has experience putting qualified buyers in quality homes located in excellent Austin and San Antonio-area communities.
Not only is home ownership more affordable, but new homes are built with features that also allow you to save money in other areas. All new Wilshire Homes are built with features such as EcoSmart technology, allowing for an energy efficient new home that can help to save money on utility bills. Plus, all new homes from Wilshire 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 Wilshire Homes.