Raise your hand if you think renting is cheaper than buying. Is your hand up? If so, put it down! Also, we’re not surprised. A lot of people are under the impression that they can’t afford to buy a home. When you consider the price tag on the average Breckenridge abode, we don’t blame you for running to Craigslist or the Summit Daily News classified page. However, you might want to reconsider re-signing your lease this year.
Buying is cheaper than renting
Look, we get it. The idea of plunking down over $400,000 on a house is intimidating. But when you reduce the six-figure price of an average home in Breckenridge to a smaller monthly payment, buying a place of your own becomes way more realistic. In fact, the average mortgage in Colorado is just $1,358. Not so bad, right?
If that’s the case, then why isn’t everyone buying?
One of the major roadblocks to home ownership is saving enough money to afford the down payment, which is usually 20 percent of the purchase price. Using our example of the $400,000 home above, that’s $80,000, in cash – up front. When you consider how many would-be homebuyers are drowning in student loan debt, coming up with that much capital seems nearly impossible.
Is there a way to make buying a home more affordable?
Yes! We’re so glad you asked. One of the reasons why buying a home is cheaper right now is because mortgage rates are hovering at historically low levels. As of today, the average U.S. 30-year fixed mortgage rate is 3.28 percent. If you have stellar credit, it could be lower, but you won’t know unless you do your research.
In a 2015 report, the Consumer Financial Protection Bureau found that 77 percent of homebuyers only apply to one lender when looking for a mortgage. This is crazy! How will you know if you’re getting the best deal if you don’t compare your options? By shopping around and putting in applications with three different lenders, you could save more than $3,500 in the first five years in your new home, says the CFPB.
Other money-saving tips
If your main issue with buying a house is more about the down payment than your monthly mortgage, listen up. Colorado has a number of homeownership programs that can reduce your down payment. However, keep in mind that with a down payment of less than 5 percent, you’ll have to buy mortgage insurance, which increases the amount of your monthly mortgage payments. But when you’re looking at a $20,000 down payment versus $80,000, things could be a lot worse.
It’s hard to compare
Much like comparing your current flame to an ex, comparing your monthly rent to a mortgage isn’t quite fair. When considering your monthly payments as a homeowner, you have to calculate property taxes, insurance, HOA fees, mortgage insurance and maintenance costs into the equation, too. But don’t stress; there are online calculators that can help you do that. And when you do, we still think you’ll find that buying your dream home is a lot more affordable than you think.
Ready to take the leap?
When you write your rent check each month, you’re essentially paying your landlord’s mortgage. Isn’t it time to cut out the middleman?
If you’re tired of throwing your money away on a rental, call the real estate experts at Dwell Summit. We know Breckenridge inside and out, and would be thrilled to help you find a new home just in time to celebrate the holidays. We look forward to hearing from you!