September 17, 2021

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Jim’s Mortgage Corner | Real Estate

CONTINUE TO RENT OR SHOULD YOU BUY?

This is one of my favorite questions as there are many benefits to home ownership. While landlords are happy to see you rent their home, you are basically making the payments for them and helping them increase their equity, which you could do with your own home.

Why are rent payments still increasing? In 2010, the vacancy rate in Grand Junction peaked at 7.32%. According to the Colorado Department of Local Affairs, the Grand Junction area has one of the lowest vacancy rates in the state at just 2.7 percent.

The average gross monthly rent for residential property in Grand Junction, Colorado (Greater Grand Junction) was $ 981 in 2019, according to the ACS Census Survey. This is an increase of 10.85% compared to the previous year.

The real estate market in Western Slope continues to grow year after year. Today’s real estate market offers great opportunities that will make the purchase at a better time than ever and give first-time buyers more purchasing power!

You will be surprised how much you can afford with your rent payment. Given that your mortgage payment includes principal, interest, taxes, insurance, and possibly mortgage insurance (depending on your down payment and loan type), a payment of $ 1,400 could equate to a purchase price of $ 240,000! Your interest rate and payment may vary depending on the loan program, but this will give you a good estimate.

Let’s compare rent and home ownership. According to Kate Porras of Re / Max 4000, the average home appreciation for the past five years in Mesa County has been approximately 11%. If you bought a home for $ 240,000 in 2021 and we’re using an average appreciation of 11% per year, your home could be worth $ 328,231 in just 3 years! If your initial down payment was 3.5% (using an FHA loan as an example), your initial loan amount would be $ 235,653, including mortgage insurance. After three years of making your normal monthly mortgage payments, your loan balance is approximately $ 220,600. In this example, you would have gained over $ 107,631 in equity in three years! If you continue to rent, it is estimated that an existing rental payment of $ 1,400 today can increase to as much as $ 1,661 by year three and you have no equity to show it.

There are many loan options that may also require a small down payment. Many lenders work with the Colorado Housing & Finance Authority (CHFA) ​​to provide zero percent down payment assistance and second mortgage grants for down payment assistance and / or closing expense assistance that may not exceed US $ 1,000. Dollars to spend on your new home.

Homeownership offers so many benefits, including:

 You can build equity in your own home.

 Your rental payment is not tax deductible. In comparison, the interest portion of your mortgage payment could be tax deductible. Please contact your tax advisor.

 Your apartment shares the walls, ceiling and / or floor compared to the privacy you enjoy when you own a single family home.

 As you have learned, your rent almost always increases when your lease is renewed. With a fixed mortgage, however, the principle and interest payments never increase.

 An apartment can only feel like a place to stay, but when you own a house you are proud of what you own.

In addition, you don’t need perfect credit to buy a home. Most loan programs can work with borrowers with scores as low as 620.

Many tenants CAN afford to buy a home but don’t know. I encourage you to reach out to your lender and they can offer you the many home loan options that are available. If you have any further questions, please feel free to contact me directly.

Branch Manager, NMLS # 1721861

Cherry Creek Mortgage, LLC, NMLS 3001