Cost Comparison: Rent vs. Buy

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Depending on individual finances, investing in a home may result in lower monthly costs than renting. Several variables determine the costs of a home loan, explained Eric Kilstrom, senior vice president of V.I.P. Mortgage, serving Anthem, all of Arizona and 21 other states:

  • Lenders determine interest rates based on your credit score and the ratio of the loan amount to the home’s value.
  • Credit scores below 640 will rarely qualify for conventional loans.
  • A down payment of less than 20 percent on a conventional loan may require private mortgage insurance (PMI). PMI protects the lender if the owner defaults. 
  • The lowest down payment typically allowed on a conventional loan is 3 percent, but PMI will tend to be higher. 
  • FHA loans, backed by the federal government and aimed at low- to moderate-income borrowers, have looser credit standards and allow modest down payments but always have PMI. 
  • VA loans for service members and veterans, also backed by the government, never have PMI but carry a related fee instead.

Borrowers can lower interest rates by paying “points” up front, which can make sense if interest rates are high and a buyer plans to stay in a home for a long time.

“With interest rates as low as they are now, it doesn’t make much sense for most people to pay points, unless they’re dealing with poor credit,” Kilstrom said.

Monthly Home Ownership vs. Rental Costs

Estimated costs of renting either of two typical single-family homes in Anthem Parkside versus buying, assuming a credit score of 720 and a 30-year fixed-rate mortgage:

See Also: Columnist Chris Prickett weighs in on other factors in the rent vs. buy equation.


Help Save Our Community
Small businesses are the lifeblood of our country and even more so this community. Supporting local businesses during this crisis can help keep our community economically viable. Please strongly consider supporting the businesses below, In&Out Magazine's display advertisers, as well as those in the Classifieds section of the magazine (see the full April 9 issue in PDF form). Many of these businesses have been part of the fabric of this community for two decades, not just serving our professional, service and retail needs but stepping up to support local charities, sports teams and so much more. Tip: If you know you’ll need to schedule a service, consider contacting a local business you trust and paying the standard fee for the deferred service. The links below go to their web sites.

Adult & Pediatric Allergy Associates • 602-242-4592
Anthem Senior Living • 602-909-9550
Appliance Pros • 502-501-5501
Business Network of Anthem • 623-455-9630
Carroll Law Firm • 623-551-9366
Century 21 Real Estate - Jeff Huff • 623-223-1221
Creative Home Enhancements • 623-551-5409
Daisy Dream Homes Real Estate • 623-879-3277
Daisy Mountain Dentistry • 623-551-5250
Desert Foothills Air Conditioning • 480-595-0938
Edward Jones • 623-551-0523
Element Dental Centers • 623-551-5555
Hand & Stone Massage • 623-551-6602
Kendallwood Design • 602-252-3844
Kodiak Roofing • 602-501-7717
Luv My PC • 480-703-6609
Merrill Gardens • 623-201-4881
North Valley Water Solutions • 623-551-0515
Preferred Business of Anthem • 623-551-0523 
Prickett Realty • 623-551-8111
ProSkill Services • 623-551-7473
RE/MAX Professionals - Mike Higgins • 623-640-7502
Rise Above Remodeling • 623-551-2013
Soft Water Plus • 623-551-7383
SonoranScapes Landscaping • 602-842-9948
State Farm Insurance - Justin Simons • 623-551-3700
Storage at Anthem • 623-226-8634
Sunset Cabinets • 623-687-6579
Thompson & McGinnis Attorneys at Law • 602-952-2666
Titan Tree Care • 623-444-8448
Titan Pest Control • 623-879-8700
Wyman Plumbing & Mechanical • 623-551-6688

For more local businesses, see In&Out Magazine Classifed Ads >>>  
 
Robert Roy Britt
NoPho resident Robert Roy Britt has written for In&Out publications since its inception in 2005. Britt began his journalism career in New Jersey newspapers in the early 1990s. He later became a science writer and was editor-in-chief of the online media sites Space.com and Live Science. He has written four novels. Email the author.
Robert Roy Britt on Email

Robert Roy Britt

NoPho resident Robert Roy Britt has written for In&Out publications since its inception in 2005. Britt began his journalism career in New Jersey newspapers in the early 1990s. He later became a science writer and was editor-in-chief of the online media sites Space.com and Live Science. He has written four novels. Email the author.

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