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Rent or Buy: Either Way You’re Paying A Mortgage

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Rent or Buy: Either Way You’re Paying A Mortgage | Keeping Current Matters

There are some renters that have not yet purchased a home because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize that, unless you are living with your parents rent free, you are paying a mortgage – either your mortgage or your landlord’s.

As The Joint Center for Housing Studies at Harvard University explains:

“Households must consume housing whether they own or rent. Not even accounting for more favorable tax treatment of owning, homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord plus a rate of return.  

That’s yet another reason owning often does—as Americans intuit—end up making more financial sense than renting.”

Christina Boyle, a Senior Vice President, Head of Single-Family Sales & Relationship Management at Freddie Mac, explains another benefit of securing a mortgage vs. paying rent:

“With a 30-year fixed rate mortgage, you’ll have the certainty & stability of knowing what your mortgage payment will be for the next 30 years – unlike rents which will continue to rise over the next three decades.”

As an owner, your mortgage payment is a form of ‘forced savings’ that allows you to have equity in your home that you can tap into later in life. As a renter, you guarantee your landlord is the person with that equity.

The graph below shows the widening gap in net worth between a homeowner and a renter:

Rent or Buy: Either Way You’re Paying A Mortgage | Keeping Current Matters

Bottom Line

Whether you are looking for a primary residence for the first time or are considering a vacation home on the shore, owning might make more sense than renting with home values and interest rates projected to climb.

-Keeping Current Matters

What If I Wait Until Next Year To Buy A Home?

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What If I Wait Until Next Year To Buy A Home? | Keeping Current Matters

As a seller, you will be most concerned about ‘short term price’ – where home values are headed over the next six months. As either a first-time or repeat buyer, you must not be concerned only about price but also about the ‘long term cost’ of the home.

Let us explain.

There are many factors that influence the ‘cost’ of a home. Two of the major ones are the home’s appreciation over time, and the interest rate at which a buyer can borrow the funds necessary to purchase their home. The rate at which these two factors can change is often referred to as “The Cost of Waiting”.

What will happen over the next 12 months?

According to CoreLogic’s latest Home Price Index, prices are expected to rise by 5.5% by this time next year.

Additionally, Freddie Mac’s most recent Economic Commentary & Projections Tablepredicts that the 30-year fixed mortgage rate will appreciate to 4.5% in that same time.

What Does This Mean to a Buyer?

Here is a simple demonstration of what impact these projected changes would have on the mortgage payment of a home selling for approximately $250,000 today:

What If I Wait Until Next Year To Buy A Home? | Keeping Current Matters

-Keeping Current Matters

2015 Real Estate Summary & Start of 2016

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The Crested Butte real estate market finished on a steady pace and displayed a 9.36% increase in transactions at an 11.35% increase in total dollar amount. While there have been several $1 million+ transactions in 2015, the bulk of the activity was seen in the condominiums and vacant land segments. This kept the average transaction cost at $451,841, which is just slightly higher than the average in 2014.

Interestingly this time last year, there were 628 active listings with 35 properties under contracts. Listings are down 5% starting in 2016 while properties under contracts are up 100%.

Residential listings in the town of Crested Butte are down 24% making it a good time to list for those interested in selling, with the opposite being true in Mt Crested Butte as residential listings are up 13%.  This is on par with the town of Crested Butte real estate market being the first to stabilize followed by Mt. Crested Butte and the surrounding areas of town.

(Keep in mind that statistics do not recognize the unique and special properties that exist in the Crested Butte market as they do not necessarily fit the mold of generalized statistics.)



What You Really Need To Qualify For A Mortgage

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The survey revealed that consumers overestimate the down payment funds needed to qualify for a home loan. According to the report, 36% think a 20% down payment is always required. In actuality, there are many loans written with a down payment of 5% or less.

Below are the results of a Digital Risk survey done on Millennials who recently purchased a home.

Millennials & Down Payments | Keeping Current Matters

2. FICO Scores

The Ipsos survey also reported that two-thirds of the respondents believe they need a very good credit score to buy a home, with 45 percent thinking a “good credit score” is over 780. In actuality, the average FICO scores of approved conventional and FHA mortgages are much lower.

Below are the numbers from the latest Ellie Mae report.

Average FICO Score | Keeping Current Matters

Bottom Line

If you are a prospective purchaser who is ‘ready’ and ‘willing’ to buy but not sure if you are also ‘able,’ sit down with someone who can help you understand your true options.

(Source: Keeping Current Matters)

Help Your Clients Deal With Fall Spruce-ups

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One of the annual routines for home maintenance is taking some time in the fall to make sure yards are in good shape. Inevitably, there’ll be some yard waste to dispose of. This is a great time to check in with your clients and prospects and help them follow local best practices.

Going the Extra Yard

Unkempt Lawn May Land You in Jail in New York

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First, remind them there’s no substitute for verifying local laws themselves — however long your clients have been in their homes, laws may have changed since their last cleanup. Larger cities and towns may have a general number that residents call for assistance on all matters, including this; in other areas, home owners can start by contacting the local sanitation department. Cities and towns will often take yard waste and convert it to mulch for local parks and other areas. But there may be a limit to how much they’ll take.

If local dumps accept yard waste material, your customers can call them to check on requirements. Home owners with trucks may find this the easiest option. The dump may charge a fee; remind your contacts to check on that.

Home owners whose yard waste may include heavy items might consider renting a chipper. While they can cost as much as $400 per day, they convert most waste items into mulch that owners can use for their yards. If they’re hesitant to use a chipper themselves, they can often hire a crew, who’ll either handle the chipper themselves or simply bring the yard waste to an appropriate disposal spot, whether the dump or a recycling center.

Get more advice on yard waste disposal at

Source: “How to Get Rid of Yard Waste,” (Sept. 8, 2015)

Foreclosures Down 68% From Peak

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Foreclosures are falling fast. Since reaching a peak in September 2010, the number of foreclosures has plunged 68 percent – from 117,225 nationwide to 38,000 as of July, according to CoreLogic’s July 2015 National Foreclosure Report, released this week.

In the past year alone, foreclosure inventory has fallen by nearly 28 percent and completed foreclosures have dropped about 24 percent. Completed foreclosures are the total number of homes actually lost to foreclosure.

Since the financial crisis began in 2008, about 5.8 million completed foreclosures have occurred across the country.

But the number has slowed significantly. As of July, the national foreclosure inventory is about 1.2 percent of all homes with a mortgage – the lowest since December 2007.

The number of mortgages in serious delinquency – 90 days or more past due – is also falling, dropping by 23 percent year-over-year. About 3.4 percent of total mortgages were considered in serious delinquency as of July – also the lowest rate since December 2007.

Read more: 10 Places Where Foreclosures Are Problematic

“Job market gains and home-price appreciation helped to push serious delinquency and foreclosure rates lower,” says Frank Nothaft, CoreLogic’s chief economist.

Five states alone accounted for nearly half of all completed foreclosures nationwide, according to CoreLogic. Those five states with the highest number of completed foreclosures for the 12 months ending in July were: Florida (98,000), Michigan (47,000), Texas (33,000), California (27,000) and Georgia (27,000).

Meanwhile, the five areas with the highest foreclosure inventory (as percentage of all homes with a mortgage) were: New Jersey (4.8 percent), New York (3.7 percent), Florida (2.7 percent), Hawaii (2.5 percent) and the District of Columbia (2.4 percent).

Source: CoreLogic