Do you know why buying a home is cheaper than renting?

Buying costs less than renting in all 100 large U.S. metros, according to the Rent vs. Buy Report from Trulia .

Rising mortgage rates and home prices have narrowed the gap between renting and buying, though rates have recently dropped and price gains are slowing.

Low mortgage rates have kept homeownership from becoming more expensive than renting. In some markets, like San Francisco and Seattle, rents have risen sharply; rising rents hurt affordability relative to incomes, but rising rents make buying look cheaper in comparison.

Trulia says that at a 30-year fixed rate of 4.5%, buying is 38% cheaper than renting nationally, versus being 44% cheaper at the start of 2013.

(While renting is more expensive, only half of potential homebuyers have credit that would get such a rate, and many first-time homebuyers are struggling to form households or get out from under student debt.)

The range of difference, as one expects, varies from market to market – buying is only 5% cheaper than renting in Honolulu, while it is 66% cheaper than renting in Detroit.

Trulia’s interactive Rent vs. Buy Map shows how the math changes under alternative assumptions for the mortgage rate, the income tax bracket for tax deductions, and the number of years that one stays in the home.

To compare the costs of owning and renting, Trulia’s model assumes buyers get a 4.5% mortgage rate on a 30-year FRM with 20% down payment. Further, it assumes buyers itemize their federal tax deductions and are in the 25% tax bracket; and will stay in their home for seven years.

Under these assumptions, buying is 38% cheaper than renting nationwide, taking into account all of the costs and proceeds from buying or renting over the entire seven-year period.

Written By: Trey Garrison

Beware: Deed Scam

If you’ve recently purchased a home, a scam may try to trick you out of more than $80.

Gitte Laasby recently reported on scammers contacting new home buyers with a seemingly legitimate solicitation offering to send a copy of their property deed and other information for $83. Laasby discovered the scam after Graig Goldman, a real estate broker with Re/Max sent in a copy of a solicitation from a company called Record Transfer Services.

At first, the solicitation known as a “Deed Processing Notice” seems legitimate. On the copy we reviewed, the property information is included, along with county information, a compliance date, and a “helpful” tip box offering answers to “Why you need your current Grant Deed and property file.”

The problem is, you don’t need your deed. Those documents are mailed to you free after a sale or transfer. And if you need another copy, you can order one through your county clerk’s office for a few dollars. In some counties you can also order deed copies online. All of which some homeowners may not realize.

“Unfortunately, sitting through a closing is quite baffling if [home buyers have] never done it before,” Goldman said. “They’re preying on people’s ignorance of the home-buyer process.”

As for the other documents, they’re useless. We contacted Record Transfer Services by phone, acting as a homeowner, and spoke with a representative who referred to herself as Sandy. According to Sandy, along with the deed, homeowners will get a “property profile,” which comes with information such as “transfer histories, property lines, county tax amounts, even the number of rooms … basically everything you need to know about your house.”  It’s all information that is either not needed, or already known, by a homeowner.

What Record Transfer Services is doing may not be illegal. A copy of the letter we reviewed included this fine-print disclaimer: “This service to obtain a copy of your grant deed or other record of title is not associated with any governmental agency. You can obtain a copy of your grant deed or other record of title from the county recorder in the county where your property is located in, for up to $83.” The representative we spoke to told us if we included a memo to her with our personal check she’d “personally make sure we deposit the check.”

Laasby reported that the scammers operate under multiple business names, including Property Transfer Services, Record Transfer Services, Conveyance Transfer Services, Record Retrieval Department and National Deed Service.

They also operate with different phone numbers. After reviewing a solicitation from Florida, we called the phone number provided and reached a recording from “Deed Processing” stating that we would receive our documents in seven to 21 days after payment or we could leave a message with our name, address and phone number to receive a call back from a representative.

The scammers also have a wide net. We found references to this deed scam in Wisconsin, Florida, Michigan, Ohio and New York. Homeowners in other states may have received solicitations, but not reported them simply because they didn’t know there was anything to report.

So far it isn’t clear how the scammers are getting homeowners’ information, but property sales and ownership is a matter of public record. Anyone can visit a county office and compile a list of recent homeowners.

Generally, if you receive a solicitation asking for more money after your closing, it isn’t legitimate. But if you aren’t sure or want more information, contact your county clerk’s office or your real estate agent.

And if you need a copy of your deed for any reason, visit your county clerk in person or online. Copies shouldn’t cost more than a few dollars.

                                                                                                                Written By: Angela Colley

 

Home sales: Best year since 2006

Homeowners sold 5 million homes in 2013, a rebound year for the industry that marked the highest level of sales since the housing boom year of 2006.

The report from the National Association of Realtors showed that there were 5.1 million previously owned homes sold in the year, up 9.2% from 2012 and up nearly 20% from 2011.

December sales were up slightly from November, the first month-over-month rise in the reading since July. Mortgage rates have been rising steadily since hitting record lows in May, raising the cost of purchases for home buyers.

The Realtors attributed the full-year gain to rising prices, lower unemployment, a drop in foreclosures and pent-up demand, as well as mortgage rates that are still low by historical standards, even with the steady increases most of the year.

The median price of a home sold in the year was $197,100, up 11.4% from the previous year. Rising prices have reduced the number of homeowners who owe more on their mortgage than their home is worth, helping to bring more buyers into the market. Tight supplies of homes for sale are keeping prices high, as the report showed less than a 5-month supply at the end of the year.


Part of the tight supply is due to the sharp drop in distressed home sales.  Only 14% of the homes sold in December were in foreclosure or were short sales for less than the amount owed on the existing mortgage. A year earlier, nearly a quarter of sales were distressed home sales.


CNN Money