Rent or Buy?

With mortgage rates low, owning can cost less than renting

We’ve all got to live somewhere, right? But when most people start comparing renting versus buying, they generally ask themselves two things.

The first is: “How much is my rent payment versus a mortgage payment?” That might seem a simple comparison today, but it’s another story if you look at the numbers 10 years down the road.

For example, by paying $1,000 per month rent to a landlord, you’ve helped them build $120,000 of equity; although, with annual rent increases, it’s actually more like $140,000. And what do you have to show for it? Zero. Zilch. Nada.

The second question is usually this: “How am I going to make the down payment?” No doubt about it, saving money is tough, especially these days. But Rick Piette, owner of Premier Mortgage Lending has the solution to both of those questions — and it comes in the form of Premier’s new 1 Percent Down with Equity Boost Program.

“With mortgage rates so low, the cost of owning a home can actually be less than the cost of renting — and that’s before you consider the financial, tax, security and emotional benefits that come with homeownership. Those alone are compelling enough reasons to decide to invest in a home of your own rather than paying rent to a landlord each month (and paying his or her mortgage).

“However, a recent study shows that as many as 87 percent of potential homebuyers make one huge, erroneous assumption: that to qualify for a mortgage loan, they need to save up a 10 percent down payment.”

According to Piette, that is absolutely not true.

“Most of the time, down payments will be between 3 percent and 6 percent of the purchase price. But right now, Premier Mortgage has a new loan program that is making huge waves in town. With only 1 percent down, you can get into a home of your own.

“In fact, not only is your down payment just 1 percent, but the lender pays another 2 percent at closing, which means you start off from Day 1 with 3 percent equity in your home,” he added. “But from there, this loan program just continues to get better.

“Premier Mortgage also pairs this 1 percent program with our ‘no fee’ loans, where borrowers pay $0 for loan origination, underwriting, processing and document fees. Other lenders charge their customers literally thousands of dollars for these items, but for traditional loans, Premier charges their customers nothing.”

Piette said that the 1 percent down payment can be a gift, too.

“That means it’s perfectly OK for a family member to contribute that 1 percent to you,” he said, “because you don’t have to show that you’ve saved it up over time on your bank statements.

“At this point, I’m starting to feel like a late-night infomercial — but this loan has so many great features,” Piette said with a smile. “Since this is a conventional loan, there’s no requirement to pay monthly PMI (Private Mortgage Insurance) each month, like you’d have for an FHA (Federal Housing Administration) loan. By taking a slightly higher interest rate, you can eliminate the monthly PMI payments by choosing lender-paid mortgage insurance.”

And, according to Piette, the seller can contribute up to 3 percent toward your loan costs, which is something that’s fairly common here in Las Vegas. That 3 percent can be used by the borrower toward paying impounds at escrow closing, like property taxes, insurance, title fees, etc.

“The bottom line is that when all these loan features are combined into this 1 percent program, we are actually closing loans for homebuyers whose total out-of- pocket expense to buy a home has been 1 percent of the purchase price — often less than renters would typically have to pay to rent a house,” Piette said.

“Like many cities, home sales in Las Vegas are rising, supply is dropping and prices have increased in many neighborhoods,” Piette explained. “Compared to next year, today’s market may look like a bargain. Those factors make now a great time to buy a home; and now that borrowers can make it happen with our 1 Percent Down with Equity Boost Program, there really is no time like the present.”

If a lack of cash has held you back from making the switch from renter to owner, this new loan program might be the perfect vehicle to put you on the path to creating your financial independence. To learn more about the qualifying conditions for this loan, visit Premier’s website at 1PercentLoan.com. For additional information or to schedule an appointment, call 702-485-6600. Or, apply online at premiermortgagelending.com.

Premier Mortgage Lending — a full-service lender; member of the Las Vegas, Henderson and Boulder City chambers of commerce, Better Business Bureau and Southern Nevada Home Builders Association; and an affiliate member of the Greater Las Vegas Association of Realtors — is located at 701 N. Green Valley Parkway, Suite 125, in Henderson.