If the American dream was to own too many pairs of shoes or scroll on Facebook, we might be ok. But alas, we dream of having our own place in this world to hang out hat. Somethiing to tinker with, decorate, raise our family, entertain friends, or even to work from. And for some, the American dream is just that because they are unaware of the benefits and potential savings associated with homeownership. It turns out it’s actually cheaper to pay a monthly mortgage than rent in 42 states. Check out a state-by-state comparison below.

Mortgage interest rates are still historically low. The average U.S. 30-year fixed mortgage rate is still well below 4% which means that you actually get to take a chunk out of your premium each month and can pay down your balance much sooner and for much less than just a decade ago when well qualified buyers were still seeing over 6%. Think about it, 2% of a $300,000 home is $6,000 additional in payments each year. That’s $500 a month just because you didn’t buy when the market said “COME AND GET ME!”

So why in the world are you not running out and “Getting” your loan so you can find your home? A key roadblock to buying a home is the inability of many would-be buyers to afford the down payment. On a conventional loan where you wish to avoid Private Mortgage Insureance (PMI) a buyer will need to have 20% down payment. You’ll need $60,000 to avoid the $120-$200 premium each month for your PMI. But lets do more math with that, because let’s face it, people move for new jobs, divorce or like our Marketing Manager, just gets bored and likes building a new home every few years. Ok, back to that math:

Let’s say you decide to still get a conventional loan at just 5% down payment. Now your down payment is just $15,000. SO… you have $45,000 sitting in the bank which certainly feels a lot better than tied up into a house if you are guy shy after the crash of 2008. Right? It just feels less scarey now than 60k wrapped up in a house. If you decide to stay in your home just three years, you still only spend four or five thousand additional on your PMI but you didn’t spend the $18,000 for that extra 2% in interest you would have been hit with if you wait to purchase years from now when interest is back up where it usually is.

(By the way, Private Mortgage Insurance protects the lender, not you, in case you default. Don’t get into a home you may not be able to afford, we can help you keep safe priorities when we look for your new home.)


Who Gets A 3.5% Mortgage Interest Rate?

To get the lowest available rate in your area, you typically need a credit score higher than 660 to 700, according to valuepenquin.com. The standard version of the widely used FICO score peaks at 850, although scores above 800 are rare. Rock Star credit rates are upper seven hundreds, but anything in the sevens means you likely have no concerns getting the best rates and even in the mid sixes, you won’t pay much more each month if you consider the analogy from above on waiting years and letting those interest rates skyrocket again.


Give us a call, let’s talk about your options. Let’s get your American Dream!

Leon at 602-614-6863 or Adriana at 602-614-4356 The Phoenix Home Gurus


So, where is it cheaper to own than to rent? Here are the 10 states with the biggest monthly savings from owning rather than renting:

  • New York: $1,635 cheaper to own than rent.
  • Massachusetts: $559.
  • Illinois: $522.
  • New Jersey: $472.
  • Pennsylvania: $461.
  • Florida: $398.
  • Maine: $396.
  • Ohio: $375.
  • Alaska: $334.
  • Rhode Island: $334.

That gap for New York is based on the fact that the monthly rent of a single-family home in the Empire State is $3,295, which is almost double the $1,660 cost of owning.

And where is it more economical to rent than buy? Here are locales with the largest monthly dollar amounts in savings for renters over owners:

  • Hawaii: $515.
  • Montana: $248.
  • Utah: $242.
  • Idaho: $204.
  • D.C.: $144.
  • Colorado: $137.
  • Wyoming: $99.
  • Delaware: $75.
  • Oregon: $12.

The GOBankingRates.com data assume that owners make a 20% down payment, based on the median list price, and take a 30-year fixed-rate home loan. It includes property taxes and insurance.

own, rent, compate, state by state

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