Should You Buy or Rent?

Should You Buy or Rent?


Is it better to rent or buy in this marketplace?

Although mortgage rates are on the rise, it is still a great time to buy in Hawaii. When it comes to the question of ‘Should I rent or should I buy?’ there are many factors that come into play. One of the most important is the tipping rate.

The tipping rate is based on a ‘rent vs buy’ scenario, factoring in the cost of buying and renting for identical sets of properties, including maintenance, insurance, taxes, closing costs, down payment, sales proceeds, and, of course, the monthly mortgage payment on a 30-year fixed-rate loan with 20% down and monthly rent. This assumes people will stay in their homes for 7 years, deduct their mortgage interest and property tax payments at the 25% tax bracket, and get modest home price appreciation.

The tipping point for Honolulu, HI is 5.8%. That means that until rates exceed 5.8% you are saving money buying over renting. Even though the current rates are almost a point higher then they were 2 months ago (4.53% vs 3.52%) they are still well below the tipping point. With the prices still affected by the drop after the housing bubble and the low interest rates, it is a great time to buy!

I hope these tips have been helpful. If I can be of any more assistance please don’t hesitate to ask. Let me show you why Cathy Pierce is A House-SOLD Name!

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