Most Billings renters should be buyers

    Last month, the results of a new Zillow study claims that “Rent is so high that a typical renter in the U.S. can purchase a home nearly 50 percent more expensive than the median valued home and keep the same monthly housing budget.”

    The study is based on nationwide statistics, naturally, where the median rent (half are lower half are higher) is $1,416 per month. The study further claims that this amount will cover the nut on owning a home purchased for $289,505.

    See a problem there? I see a couple of them. First, these statistics aren’t local and, as Zillow certainly understands, all real estate is local.

    So, let’s crunch some numbers

    We chose the new Avenue C apartments for our comparison of renting vs. buying. The median rent there for a one-bedroom, one bathroom is $1,480. The community also requires renter’s insurance which, on average, costs about $12 a month in Montana according to valuepenguin.com. So that brings the monthly rent to $1,492.

    While there are no 1 bedroom, 1- bath condos for sale in Billings as of this writing, the price for a 2/1 is $238,000. Your monthly payment, which in this case includes principle, interest, insurance (using the average least expensive price in Billings), taxes and the HOA payment would be about $1,495 a month. This assumes you get a loan with a 20 percent down payment on a 30-year fixed rate mortgage at 3.944 percent interest.

    So, for $3 extra per month, you can buy a home, instead of rent, and get an extra bedroom.

    By the way, the median rent for a 2-bedroom, 2-bathroom apartment at Avenue C is $1,885. Nearly $400 more a month than purchasing a similar-sized condo.

    So, what’s stopping you from ditching your landlord?

    Typically, it’s the cash outlay that keeps renters from becoming owners. But it doesn’t have to be. There are a number of programs, from local to national, that are willing to help first-time homebuyers with the down payment and/or closing costs on a home.

    For instance, the Score Advantage Down Payment Assistance Program is available to folks who qualify for the Montana Board of Housing mortgage loan but lack the down payment. MBOH will pay up to $6,500 toward your down payment in the form of a fixed-rate second loan with no pre-payment penalty.

    HOME, the NeighborWorks Montana Statewide Down Payment Assistance Program provides loans to those with incomes at or below 80 percent of the Yellowstone county median income. The loan amounts range from $2,500 and $25,000 There are other requirements as well and you can learn more online, here.

    HRDC in Bozeman offers the Road to Home Program to Billings residents and you can get the details at thehrdc.org.

    On a federal level, the government offers the Home$tart and Home$tart Plus programs from the Federal Home Loan Bank. Available to only eight western states, Montana included, depending on which program you choose, you can receive a grant of up to $10,000.

    Of course, since we’re dealing with the government here, expect lots of red tape, such as income limits and others. But, especially if you’re currently receiving public housing assistance, this is your chance to get out of renting and into home-ownership. Plus, once you successfully enroll in the program you’ll have an entire year to find the home you want to purchase.

    HomeNow is a program for potential homeowners who find savig for a down payment challenging. The program covers up to 100 percent of the down payment and/or closing costs in the form of a second loan. It’s not restricted to first-time buyers. This program can be initiated by a HomeNow-approved lender and you can find these lenders online here. Click on the orange bar labeled “Find a participating lender in” and then, in the dropdown menu, click on “Billings.”

    Additional sources of down payment assistance you may want to look into include:

    Remember, this will be your first home, not your forever home, so expect homes in your price range to be older, smaller or in need of a bit of work. But, the tradeoff is that when you buy the home, you’re building your equity, not your landlord’s.

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