The main reasons for the 45 percent savings are rising rents and low lending rates. Homebuyers will be pleased to discover that the average savings from owning a home total $771 per month.
This number is based on a couple of factors. First of all, it assumes that buyers qualify for a 3.5 percent mortgage rate, plan on staying in their home for seven years and are in the 25 percent tax bracket and have taken advantage of homeowner benefits. Lastly, the amount of savings also assumes that buyers put down 20 percent on their new home.
Yet homeowners will be happy to learn that they don't have to be in all of the above categories in order to save money.
Yet homeowners don't need to fall into all of the above categories in order to save on housing costs. Even if buyers stay in their homes for less than five years or only qualify for a 4.5 percent mortgage rate, buying will still turn out to be cheaper than renting.
The cost savings of buying versus renting can easily make one wonder why home sales aren't even higher. Due to the recession and unemployment, many renters who wish to own a home are struggling to put away money for a down payment.
However, the housing market will continue to stay more affordable than renting for quite some time. Even if mortgage rates were to rise, buying would still be cheaper than renting in most large urban areas.
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