Buy or Rent a home ?


The national median mortgage payment is $1,687 a month — nearly
double the median rent payment of $868 a month. Yet people are often
told that buying property is one of the strongest investments they can make.
What is the best option? Below is information about buy vs. rent,foreclosures
and mortgage rates.



Rent Pros:

Mortgage payments exploded during the real estate boom, but rents
haven't kept pace, often running half as much as what homeowners pay.

Home prices recently rose to skyscraping heights in cities like New
York, San Francisco, Los Angeles and Washington. Rents have not gone up
as much.

For a family making the U.S. median income of $46,913, owning the
median-price home of $224,739 would eat up 51 percent of its income.
Renting would require just 25 percent.

By renting, you gain the flexibility of a lease and freedom from home
repairs. You can also invest more money in stocks, bonds, and other
assets that could appreciate faster than real estate over the next
couple of years.

With real estate agent commissions, loan fees, title insurance,
inspections, and all sorts of other costs, your property must appreciate
approximately 15 percent just for you to break even and recoup these
costs.

If you choose to rent, you can sit out potential drops in market value.
In June, condo prices fell 2 percent nationwide and single-family home
prices dipped in several markets, including San Diego, Boston and
Washington. Who wants to find out they've lost equity just a month into
a new mortgage?

If you rent, you can live "beyond your means" in a sense. You can live
in a location where you would be unable to buy a home. One broker told
us he was renting a house in Santa Barbara, Calif., for $3,000 a month.
The house has an estimated market value of $1.4 million. That would give
you a mortgage of $6,000 or more per month.



Rent Cons:

Nationally, rents are expected to climb 5.3 percent this year,
according to the National Association of Realtors. They could go even
higher in strong labor markets like Washington, D.C., where rents have
climbed by 7 percent over the last year.



Buy Pros

Homeowners can argue that they're building wealth by investing in an
asset that appreciates over time, while renters are throwing money out
the window.

Homeowners can also enjoy stability (with a fixed-rate mortgage), tax
advantages, and financial security.

Home sales are falling, and in some cities, prices have started
dropping, too. In June, condo prices fell 2 percent nationwide, and
single-family home prices dipped in several markets, including San
Diego, Boston and Washington

As more people take a wait-and-see attitude, they put pressure on home
sellers to cut prices. At the same time, as renters swarm the apartment
market, they force up rents. This year, rents are expected to climb
about 5 percent, and by even more in such expensive markets as Seattle,
New York and San Francisco.

Rents in New York City have already climbed 5 percent to 20 percent
over the last year.

In San Francisco, where the median home costs about $760,000, apartment
rents have jumped 15 percent in the last two months.



Buy Cons

For the first time ever recorded, Americans owe more money than they
make.

Millions of Americans bought into the real estate boom with adjustable
mortgages and home equity loans. Now rising interest rates are forcing
them into agonizing financial choices.

Families who never thought they'd be able to buy into the American
dream now have a home, thanks to creative mortgage structures and low
rates. More than one out of every 10 home buyers with this type of
mortgage, however, is behind in payments.



Foreclosures:

Nearly 850,000 homeowners faced foreclosure last year, and the number
is expected to climb even higher this year.

Foreclosures nationwide were up 72 percent in the first quarter from
the same period in 2005.

By the second week in August, nearly 520,000 properties were in some
stage of foreclosure; at that rate, nearly 1 million properties will
have entered foreclosure this year.



Mortgage Rates:

The average rate for the popular 30-year fixed rate mortgage jumped to
nearly 7 percent last month — the highest level in more than four
years.

Nearly one-third of the total outstanding mortgage debt is set at an
adjustable rate, according to Fannie Mae, the largest source for home
mortgage funding in the United States.

Goodluck Market Traders



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