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It doesn't get better than seeing the troops come home and home ownership used to be the American dream -- -- in this economy though.
You gotta wonder whether that's still the case in today's -- take charge consumer protection segment we're gonna take a look at whether buying still beats renting for many folks.
Have you heard about these record low interest rates that just came out they certainly make the case for purchasing a properly take a look at that -- the rate for fifteen year loan down to -- Point 894%.
Thirty year at three point 67%.
Joining us now real estate and business attorney -- all of sense she's the director of the Carnegie group and -- it's great to have you back.
Thanks for having me Jamie we -- all dreamt.
Of owning a home and a lot of people are in hot water right now because they own their home but they -- less for no more than the home is worth.
So those -- -- just thinking about getting into a new home should they consider renting.
Well you know there are four factors that most folks look at the first as you mentioned is interest rates also the price of homes the cost to rent.
And where else you might be investing your money if you're not gonna invested in -- home.
So as far as the rates go we do have all time lows -- anyone's ever bought a home before knows that you look at that good faith estimate you look at the truth in lending you look at your amortization schedule.
And you actually pay more for the -- then you do for the house over the course of of the homeownership.
You know the problem with that though is that low interest rates have been low for so long that folks just are not rushing out because of that.
And there's a point of diminishing return when you can bet that cool -- the Fed has is not really encouraging homeownership as much as it would be discouraging if rates went up again.
It sounds to me like what you're saying is you're going -- pay interest so whatever you will always on the home.
Could be a substantial number the good faith estimate.
Taking -- very close look at.
And so -- the rental market right now.
Are you saying that you some people think of it is throwing money away every month on rent why is it a better option first and for -- Well it's really a combination of the two.
Normally -- -- -- in the past we would look it up buying a home as as an investment because home values we're going up when in truth.
Homeownership is really only part investment and part consumables remember we don't wait for the price of a new card a bottom or the price of new shoes to bottom before we go ahead and -- -- because we need that we consume them.
And the truth is in some markets we got home values that are actually going up in others we've got home values that are still going down.
But the rent to own question really comes down to a ratio that's called.
The rent to -- ratio and that considers the cost to rent in a market compared to the cost to buy.
And in most markets now that rent to -- ratio actually favors.
Buying even -- home values aren't going up.
Because they're still low and even more importantly -- because rental rates are going up so quickly we've got so many people.
Buying these homes as investments and you know what they're gonna keep investing the -- the I keep raising the rate to rent because.
They wanna make money on them so there's you connotation that it sounds like good -- there are business people now that are looking at homes and -- them on spec and renting them instead of trying to resell them that's a whole industry.
What we need the product of more people are going to rant so that's good news.
But the fact that people may be looking for rentals so they take the money that would have been a down payment what should they do with it.
Well and that's the and that's the third factor really is the alternative.
Investments right now are nothing the flip side -- interest rates being so low is.
Interest rates are so low so for a CD or money market there's really no there's really no return on that investment.
If you're going to buy a home now is a great time because rates are low because the home prices are low.
And the fact is even if fair value of that home if you happen to be in a micro market -- the -- gonna go down a little bit more maybe another two or 3%.
A hole -- a long term investments would still make sense to buy today so it's conceivable and other words you get to live there as well.
But yeah I -- here is go ahead.
We don't know what's gonna happen two or three years down the road I mean the federal government is entirely -- writing all of the rules on mortgages and home ownership.
Including what's gonna happen with Fannie Mae and Freddie Mac who as you know provide most of the mortgages to -- this -- the people in this country.
So we may be an environment -- -- three years down the road where it's even more difficult to get a mortgage for example under Dodd-Frank they're rewriting the they're reading the qualified residential.
Mortgage -- -- now one of the proposals was for that to qualify as a qualified residential mortgage you have to put as much as 20% down.
And the National Association of Realtors has already told us it could take the average American family fourteen years to save that money -- so because we don't know what's gonna be required to buy a home 345 years from now it may make sense for a lot of folks especially if your borderline.
To go ahead and pull the trigger now.
Yeah and and may -- -- certainly qualifying for those loans with those low rates has gotten tough to -- great to have you here thanks so much.
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