If you’re a renter in San Jacinto, CA who is thinking now is a great time to be a first time home buyer but market conditions have you wondering whether buying your first home is a smart financial decision.
Here are some tangible numbers to consider.
If you’re renting, whether it be an apartment or a home, you’re making a mortgage payment it’s just not yours, it’s your landlord’s, so this may be an opportune time to make that move from renter to homeowner.
Making that move is a lifestyle change and an important commitment, so if you’ve decided that life circumstances make buying your first home a good move for you and your family, then your next step is to analyze the investment side of your decision.
In a previous post I talked about the Rent Ratio tool I picked up from the New York Times.
This tool is to help you compare the investment side of your decision by comparing the cost of renting with the cost of owning, like the price-to-earnings ratio that stock investors use.
To help first time home buyers in San Jacinto, I’ve taken the average rental rate for a 3 bedroom home in San Jacinto (from RentRange.com) and compared it with the average sale price of the same size home (figures from Trulia.com) and come up with the Rent Ratio for San Jacinto.
Average Rent: $1200 (1480 sq. ft - 3 bedroom)
Average Sale Price: $112,400
San Jacinto Rent Ratio: 7.81
In concrete terms, a rent ratio above 20 means that the monthly costs of ownership will exceed the cost of renting. Anything less the pendulum starts to swing toward home ownership. Anything less than 10-14 is clearly a buying sign.
- So what does it all mean to you?
Based on Rent Ratio comparison, San Jacinto’s Rent Ratio (7.81) is: (1) clearly on the buying side and (2) one of the lowest in Riverside County.
But what about that ultimate barometer? That very technical term that we mortgage professionals refer to as the “monthly nut” or mortgage payment
Your “nut” in San Jacinto would be $857.59
(Payment is an estimate based on an FHA loan at 5%/5.12 APR for 30 years with minimum 3.5% down payment, including mortgage insurance, homeowners insurance and estimated property taxes at 1.65%)
So not only is the Rent Ratio on the buying side, you can own that same home with a payment almost $350 less than the average rent!
Other related posts:
- A new tool for first time home buyers-Video
- First time home buyers should you continue to rent or buy?
- Buying your first home a no brainer?
- First time home buyers do you really need a Realtor?
- First time home buyers how to buy your first home - Video
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