Louisville KY Real Estate Blog

Owning is Cheaper than Renting

Owning a Home is Cheaper than Renting

A recent study found that the cost of owning in home across the US was 38% cheaper than renting!  Here are the reasons why this is true:

  • Rents have been accelerating far faster than the price of homes over the past several years.  Part of this was due to the tightening of credit standards after the crash of 2008. Changes during that period led to more people being ineligible for loans, which meant they couldn't buy homes, which led to more upward pressure on rents due to demand.
  • Home prices have been increasing across the US, but for the most part, have not yet reached "bubble" prices of 2007 and early 2008 (BEFORE the crash late in the year, which started a multi-year decline in home prices).
  • Interest rates are still VERY low as compared to any decade since the 1950s.  Typical home loan interest rates are still barely over 4%, even though many experts expected that they would rise above 5% this year.  Remember that each ONE PERCENT increase in mortgage interest rates is equivalent to a TEN PERCENT increase in the cost of the home you may purchase.

Buying and owning a home in the Louisville, KY market is still a smart investment, and it's still possible to buy with as little as 3% down (even less if you are a veteran or qualify for down payment assistance -- call us for more details on this).

If you want the best possible assistance in purchasing your new home in Louisville, complete the form below or call us at 502-608-4941.

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How Much Down Payment do I Really Need?

How Much Down Payment Do I REALLY Need?

One of the biggest concerns non-homeowners voice is the lack of a "big enough" down payment.  While down payment, credit score, employment status and past bankruptcies/short sales/foreclosures absolutely DO matter, the required down payment may be less of an issue than you think or expect.

Many people think that theyt must save 20% of the purchase price before they can buy a home.  In reality, Buyers can acquire a home in the Louisville, KY market with as little as $0 down.

Here are a few "particulars":

If you're a veteran with a clean discharge history, the VA will guarantee your loan with no money down, and even better, with no Private Mortgage Insurance (PMI) premium.  For vets who are first-time Buyers, this is usually the lowest cost loan and is a "home run" for you!  The same "deal" is available to Buyers who purchase in an area where USDA Rural Housing incentives are offered.

If you decide to use an FHA-backed loan, you will need 3.5% of the purchase price.  This sounds good, but you must also pay 2+% when you take the loan (which is usually rolled into your loan balance), PLUS over 1.5% of the loan balance as "PMI" each year, as long as you have the loan.  Thsi used to drop off when your balance dropped under 80% of the home's current value -- but not any more.

Conventional Loans can be written with as little as 5% down at purchase.  Unless you put down 20%, you will still pay PMI until your balance is less than 20% of the home's current value, but then it stops.

Bottom line -- there are downpayment assistance programs for families with limited funds, 3%-down No PMI loans (with slightly higher interest rates), Kentucky Housing Partners loans, etc., etc.  Don't assume anything.  Just...

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