Renters or Home Buyers?

So VA mortgage rates have gone up but it still may make financial sense to consider buying a home. We’re going to spend some time in the next few paragraphs re-examining the question: should I continue renting or should I buy? First, we need to spell out a few assumptions necessarily made for comparison purposes.

• Here at VALoansMN we consider many factors when offering your personalized mortgage rate. What is one rate for Joe may be somewhat different than the rate available to Jane. There is no one VA mortgage rate but for purposes of this article we’re going to use a general rate which may be higher or lower than your personalized rate. To give you a personalized rate contact Brad at 612-240-9922. 
• The cost of a house and the cost of monthly rate will vary depending on size, location, availability and other factors.  For our purposes we are going to use mean or average prices in the Minneapolis/St. Paul metro area.

If you are currently renting an apartment or house it may be time to take the plunge and become a homeowner. There are several advantages:



1. There’s no landlord to answer to
2. You can upgrade or improve the home to your tastes
3. You may build equity and credit
4. There may be some tax benefits (although the new tax laws diminish this likelihood)
5. More stability (especially in schools)

There are some disadvantages as well and at VALoansMN we want you to have the complete picture:

1. Responsible for repairs, remodeling and maintenance
2. Could lose money if home values decline
3. Requires more paperwork
4. Extra expenses beyond mortgage payments

Perhaps a major factor in this consideration is money. Keep in mind we’re using the generalizations outlined above in our money discussion.

Cost of rent can vary depending on the size. A studio can rent for around $1,300 where as a 3 bedroom home will rent for closer to $3,500+. What could you buy for about $3,500 a month? 

Using Redfin as our source the median home price in Minneapolis is $300,000, down almost 5% from a year ago, St. Paul $254,000 down about 2%, however, Eden Prairie was up almost 19%. This means half of all homes sold are price below this number and half are priced above. We’ll us the median price of $300,000 for our calculations.

Here’s the beauty of a VALoansMN mortgage, you do not have to have any down-payment. With your earned VA benefit you can finance 100% of the cost. The monthly payment for our median priced home would be about $2,000. That’s less than your current rent for 2 or 3 bedroom apartments. Of course there are property taxes to pay.

Minneapolis tax rates are higher than the state in general so we’ll use worst case scenario. Taxes on our median price Minneapolis home will run about $400 a month. Then there’s homeowners insurance of about $100 dollars. (You should also be paying insurance as a renter which will likely cost about half the cost of the homeowners insurance).  Add up the numbers and you can see you can actually save money by owning your own home.

We need to emphasize that we’ve used very general numbers for this illustration. To drill down on your real costs start with a call to Brad at VALoansMN (number for Brad above) then consult with an accountant or financial planner. A little due diligence may uncover a great spring for you and your family.