Buy vs. Rent – How Much Can You Afford?

by Washington Federal Team on August 1, 2012

Despite the tough economy, it’s one of the best times to buy a house in the U.S.  Did you know roughly a third of Americans choose to rent rather than buy? More than 70 percent of Americans under 30 are living in some type of rental housing, despite the fact that buying may actually be a better deal. Plus, right now, 30-year fixed mortgages have hit an all-time low.

An astounding 68% of New Yorkers, 67% of Bostonians and 62% of Los Angelites are renting. Is it the housing market?  Or could it be a simple matter of choice?

According to the National Multi-Housing Council, renters generally make less than homeowners. If you can’t afford a large down payment and don’t want the burden of a mortgage, then renting becomes the best option, right?

Maybe not.  Assuming a 4% interest rate and 30-year mortgage term, getting a $140,000 loan means you would make a monthly payment of $668. That’s likely less than many people are paying for a 1-2 bedroom apartment.

Home buying - How much can you afford

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