Why Is It Easier To Qualify For Buying A Home Versus Renting Today?
Buying a home is now not only cheaper than renting, but easier to qualify for in many ways too.
As we turned the corner into 2015 the data showed that buying a home was half as expensive as renting, on average in the US.
Low Home Prices
Low home prices are still a major part of this. While the US housing market has certainly rebounded well, it isn’t expected that all home prices will have returned to their previous values until at least 2017. With historical data suggesting that American real estate prices will only keep growing beyond that most of the world still sees homes and condos hear as an incredible bargain.
Low Mortgage Interest Rates
However, what has really been keeping buying a home cheaper than renting has been historically low mortgage interest rates. For the majority of renters this makes the monthly payments on a purchase mortgage far lower than renting comparable properties. While there may be no telling exactly when home loan interest rates will rise or by how much, it is virtually certain that they can’t continue to stay this low for very long.
Buying a Home vs. Renting
What is really making buying a home more attractive for so many is how much easier it is to qualify and get in. The current rental property market is jam packed with brand new and inexperienced landlords, nervous property owners that have become paranoid about who they rent to, and super-sized institutional landlords with little inclination or ability to help the individual. With fewer buyers, and more renters these landlords feel that they can ask for the moon, and get it. This goes beyond high monthly rental prices to significant deposits, and having to jump through tough screening hoops.
Contrast this with buying a home today. When applying for a mortgage and buying a home today individuals don’t have to pass criminal background checks, have to fork out application fees without knowing if they’ll get approved, or be subject to the even more rigorous income screening processes of today’s landlords. This is all on top of the fact that current buyers can lock in at least 30 years of low payments and own their own home at the end, while renters have to battle ongoing rental increases every time their lease comes up for renewal.
What will you buy?