Crunching Numbers Can Lead To Home Ownership

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Affordable housing in Payson may not be easy to come by, at least at first glance or even at the second and third looks.

There are quite a few financing options available though, so if home ownership is at the top of your priority list, it may be just a matter of shopping around.

Experts say the first place to start is with your own needs, wants and what is affordable to you. "Affordable" depends on the financial resources you have and what they are already committed to, such as a car payment, credit card debt, or other loans.

With resources spread too thin, renting may be the best option. But the difference between renting and buying is really pretty minimal today.

Renting a two bedroom, one bath house or apartment within the Payson town limits costs an average of $622 a month. This is an average of the rent being asked for 15 different places listed in the most recent real estate special supplement to the Roundup. It includes apartments, site-built homes and manufactured housing.

The national average "affordable" housing cost, including utilities, is 30 percent of household income.

Utilities are about $240 in the summer. So, between rent and utilities, the average housing cost is $862 a month, or $10,344 a year, which amounts to 30 percent of $34,480.

The same real estate guide provides an opportunity to study the average cost of owning a two-bedroom, one-bath home: $96,120. Again, this is within the Payson town limits and the listings included both site-built and manufactured homes. There were a total of 10 listings featuring two bedrooms and one bath, plus a couple with half-baths.

Using statistics in the 2000 Payson Housing Report, an annual, gross income of nearly $35,000 would be needed to qualify for a $96,000 mortgage. The statistics came from the Fannie Mae Foundation and were based on a 30-year, fixed rate loan at 8 percent interest.

Interest is down today, and there are many variables that factor into what kind of mortgage a house hunter can obtain.

For instance, to get a 30-year fixed rate loan for that same average priced home, with no money down, someone carrying no other debt would qualify with a monthly gross of $1,700 a month, or $20,400 a year, according to a mortgage professional. The payment would be about $740 a month, plus utilities, which would push the housing cost to about $980. This is 58 percent of the gross though, not the 30 percent, that would qualify it as "affordable" according to national statistics. A monthly payment of $980 is 30 percent of $39,200.

So, renting a two-bedroom, one-bath house, plus paying the utility bills costs an average of $862, compared to the $980 mortgage payments and utilities for that same house, with no money down.

Only the individual buyer can decide if the $122 difference is something that their finances can absorb each month. Another consideration: the buyer will see a tax benefit not available to the renter.

Someone with about $400 in monthly debt, between a car payment and two or three credit cards, would need to be bringing home about $2,600 a month, or $31,200 a year. However, if someone has very good credit, their debt load could be higher and they might still qualify.

Again, this was asking about a mortgage with no money down. Having money available to make a down payment will make a difference in qualifying and, of course, the house payments.

Buying a house is probably not as easy as buying a car in today's market. But taking the time to look at all sides of the equation and shopping around for the financing that fits your individual circumstances may make the myth of affordable housing a reality sooner than you think.

Some untraditional options are out there too, but that's another story.

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