United Guaranty Insights
How Buying Now Versus Renting Can Produce Savings
By Valerie Tucker Ausband, Regional Vice President for the Southeast
United Guaranty Corporation
Posted on December 4, 2015
To understand the struggles of first-time home buyers trying to move from renting to purchasing, consider that a 20 percent down payment on a median-priced home averages $36,500 across the US, according to an analysis Zillow published in November.
Banks typically require 20 percent down for a mortgage without private mortgage insurance (MI). Based on median home prices across the country, those down payments vary from a high of $182,200 in San Jose, CA, to a low of $23,840 in Detroit.
It's no wonder that experts say it takes an average of 12.5 years for a prospective home buyer to save one-fifth of the purchase price of a home.
With MI, home buyers who qualify can purchase a home right away with a down payment as low as 3 percent—or even lower for buyers who meet eligibility requirements. In today's market, qualified home buyers should consider the benefits of purchasing a home they can afford now—before interest rates increase or the price of their dream home rises out of reach.
The Zillow study also underscores the fact that buying a home costs less than renting. In Detroit, for example, homeowners typically pay 10.1 percent of their monthly income in mortgage payments, while renters pay 25.2 percent of monthly income, according to Zillow.
In the higher-priced San Francisco market, homeowners pay 40.6 percent of their monthly income to mortgage payments, while renters pay 47 percent of their monthly income to a landlord.
Home buyers can also benefit from price appreciation, potential tax savings, and increases in equity. In one scenario—involving a $175,000 home—a purchaser would pay $23,589 less over a five-year period versus continuing to rent. The full details are listed on United Guaranty's First-Time Home Buyers page.
Valerie Tucker Ausband is United Guaranty's Regional Vice President for the Southeast. She has more than 20 years of mortgage industry experience. Valerie joined United Guaranty in 1999 as an Account Executive after having served in a similar role for an Atlanta-based title company. Valerie was named United Guaranty's Vice President for National Accounts in 2004, and she was promoted to Regional Vice President in 2006. Ausband, who lives and works in the Atlanta area, is a graduate of the University of Georgia. She has earned the Accredited Mortgage Professional (AMP) designation from the Mortgage Bankers Association. She is active with the Mortgage Bankers Association of Georgia and has held a number of leadership roles in the organization over the years.
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