Is it cheaper to rent or buy? As part of our partnership with Tim and Dave from Trusted Lending Advisors and my husband Jeremy, a local Realtor, here’s some data on whether it’s cheaper to rent or buy in the Colorado Springs housing market.
You can buy an average priced Colorado Springs home for about $1,000/mo. So using that number, let’s see what $1,000 a month gets you in terms of a rental vs. owning your own home:
Link to homes for rent at $1,000/month
Link to homes for sale for $200,000 which is about $1,000/month
(Use the arrows at the top of the page to cycle through the listings.)
(For purposes of this comparison, I based calculations on the most common loan product my clients chose over the past year, which is a conventional loan with 5% down payment and up front PMI. I’ve used a 3.75% interest rate amortized over 30 years. Using those assumptions, and making a reasonable estimate for taxes and insurance, you could likely buy a home today for $195-200k and have a monthly mortgage payment of about $1,000. You’ll want to talk to Tim about what loan product makes the most sense for your specific situation and to check current rates.)
Bottom line – by purchasing a home, you can keep your monthly payment the same and have a much nicer home than what you could rent.
As Jeremy mentioned above, you can buy a very nice home for around the $200K mark, and depending on the loan program and down-payment available, in many cases can keep your payment in the $1000/month range. Other factors such as credit scores and income/debt load also affect your loan pre-approval, which is why we strongly recommend you contact us for a pre-approval before beginning the house hunting process (see our last post for more info on getting pre-approved).
We have seen dozens of clients this year buy a home for the same or less monthly payment than they pay for an inferior rental property. For example, many of our clients are paying $1200-1500 in rent for a 3 or 4 bedroom, 2-3 bathroom, 2-car garage home (depending on neighborhood, condition of the home, etc). Most of these clients have been pleasantly surprised to see their payments drop or stay the same for a comparable or nicer home.
Additionally (and without giving any “official” tax advice), it’s worth noting that as a home owner you’ll enjoy a significant tax write-off that you don’t have as a renter. 100% of the mortgage interest you pay annually, as well as some closing costs (in some cases) and monthly mortgage insurance (in some cases, subject to income limits) are tax deductions. Confirm with a CPA for exact details, but we regularly see clients buying at the $200K level experience a $2-3K larger tax refund after their first full year of home ownership. We always say that your two best tax write-offs are kids and mortgages!
Here’s another “Fun Fact” for you as well. The National Association of Realtors (NAR) statistical data reports that home owners in the US have a net worth 41 times higher than renters. This is due to the fact that as you make your mortgage payments monthly and as your home naturally appreciates over the years, you build up equity in the home which when sold will provide you with a strong return on investment.
Bottom line – if you’re happy with your current home, in most cases you could own your own home for the same or lower payment while also enjoying potential tax deductions and building equity for the future.
So whatever you goals are, whether it’s to get more house for the same monthly cost, or just save money to live in a comparable home to what you’re renting, you almost always save money by buying a home in the current Colorado Springs market.
Thanks to Tim and Jeremy for the input! If you’re ready to look for a home, I’d love to have you consider using Tim at Trusted Lending Advisors as your lender and my husband Jeremy as your Realtor! I know that you’ll receive exceptional service from both of them, and I’m not the only one who feels that way.
Remember that Trusted Lending Advisors is offering Springs Bargains readers a lender credit for your appraisal (up to $400 value) on any closed loan transaction! Just mention Springs Bargains when you call Tim at (719) 266-8183 or visit the Trusted Lending Advisor website.
You can search Colorado Springs homes for sale on Jeremy’s website, with no registration required to view any information. You can contact Jeremy at (719) 231-9043 or firstname.lastname@example.org.
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