More renters considering home ownership

07.24.09
By James Conroy

Many Americans are living in apartment complexes or other rental units because they feel they cannot afford a home loan, but a new study finds that the gap between rent and mortgage payments has dropped over the last three years meaning more Americans may want to consider a home loan.

A study of 45 metro areas around the country by the Associated Press has found that when choosing whether to rent or buy, a growing number of renters are purchasing a home. That's because the gap between the mortgage on a medium-priced home and the monthly payments on a mid-level rental has gone from $777 per month in 2006 to $221 this year in the regions the AP studied.

With a variety of options for people looking to buy, home ownership may actually cost less for some renters and they may even get more square footage for their money.

Jere Ross, a member of the Air Force, told the AP that he used a Veterans Administration loan to buy a four-bedroom home in Florida. With no down payment required on the VA loan and a 30-year mortgage at a fixed 5.5 percent, Ross told the news provider that he now pays $110 less for a home that is almost double the size of his old apartment.

"It just came to a point where we were just throwing our money away on rent," the 23-year-old told the news outlet. "When it came to find out that we could own this house for, less than what we're paying in rent, it was a 'no duh!' kind of moment."

It would appear that a growing number of people who were renting are looking at purchasing a home in recent months as figures from the latest weekly survey from the Mortgage Bankers Association finds that mortgage applications rose 6.6 percent last week over the same period last year.

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A growing number of Americans are looking at buying a home as the gap between rental payments and mortgages tightens