LOS ANGELES, July 18, 2016 /PRNewswire/ -- To help Americans better understand if renting or owning a home is a more affordable option, personal finance website GOBankingRates.com has released a guide detailing how monthly rent compares to monthly mortgage payments across the U.S.
The investigation found that it's cheaper to own a home than it is to rent one in 42 states. Renting is more affordable in only eight states and the District of Columbia.
"The good news is mortgage rates are near historic lows," said Kristen Bonner, lead researcher on the study. "Unfortunately, Americans are still running into road blocks with being able to save enough money to afford a down payment, and are therefore forced to rent."
The study compared median rent prices for single-family homes against the median list price of homes in each state. GOBankingRates assumed a 20 percent down payment for the median list price and applied a 30-year fixed-rate loan term. It also included the cost of property taxes and insurance.
Where Renting Is Cheaper than Owning
Prices illustrate the monthly amount saved by renting.
District of Columbia: $144
Top 10 Places Where Owning Is Cheaper Than Renting
Prices illustrate the monthly amount saved by owning.
New York: $1,635
New Jersey: $472
Rhode Island: $334
The monthly rent of a single family home in New York is $3,295 a month — almost double the monthly cost of owning.
It's only $27 more a month to rent a home than it is to own a home in Arizona, and $67 more a month in South Dakota.
If you are interested in owning property in Hawaii, expect to pay $515 more a month than your renting neighbor.
Methodology: GOBankingRates.com surveyed all 50 states and the District of Columbia to identify where it's more expensive per month to own or rent a home. The median monthly rent was sourced from May 2016 Zillow data on single-family homes. GOBankingRates sourced median home list prices in each state using May 2016 Zillow data. Current mortgage rates in each state were sourced on June 24, 2016, from Zillow. GOBankingRates then used the Zillow mortgage calculator to determine the monthly mortgage payment, assuming a 20 percent down payment on a 30-year fixed-loan.The mortgage calculator also took insurance and taxes into consideration to determine the monthly mortgage payment.
GOBankingRates.com is a news and features personal finance and consumer banking website, offering visitors the latest on everything from tips for saving money, investing for retirement, finding a good interest rate and getting a loan. Its content is regularly featured on top-tier media outlets, including MSN, MONEY, AOL Finance, Business Insider, and dozens of other top-tier media outlets. GOBankingRates specializes in connecting consumers with the financial institutions and products that best match their needs and financial situation. The mortgage calculator also took insurance and taxes into consideration to determine the monthly mortgage payment.
Katie Johnston, Media Relations GOBankingRates.com [email protected] 310-297-9233 x116