[cthalupa]

Honest question: Is your credit bad?

Even adding in PMI, property taxes, a 30 year rate, etc, the mortgage of house should be about the same, and often less than the rent unless you just can't get a good rate. A landlord has to make money, including the costs of longterm upkeep, replacing things like the air conditioner, paying real estate agents their commission, etc.

If you can't make a 20% down payment I've seen PMI be enough to push it to a bit over what the rent would be at the house, but that certainly shouldn't take you 10-15 years to pay off and get out of PMI range.

The only thing I can figure is you have a significantly higher interest rate than people would get in the 'average credit' category

About the only places where I've ever seen this not be true is where rent control is in effect.

[themartorana]

Ha, no, my credit is stellar. But I live in a nice neighborhood of Philadelphia. My 1000 sq ft 2 br apartment costs $2300/m in rent. (I'm aware it's a lot cheaper in other neighborhoods, but I love living here.)

To buy my apartment (and this is just for the apples-to-apples comparison) would cost in the neighborhood of $485,000. If I put $97,000 down (about 20% to avoid PMI) I'm looking at around $2350 inclusive of taxes. However, there's HOA fees. Here they cover all (yes ALL) utilities, but they're $890/month for this apartment. Now I'm out $97,000 in liquid cash, my monthly payment is $3240 inclusive of HOA.

I can easily get the loan, but in the city, it's not always cheaper to buy.

[tobylane]

I'm not familiar with HOAs. You pay them, they pay your utilities? How much are the HOA and utilities worth when they are apart?

[ghaff]

I imagine the arrangements vary on whether utilities are included as part of homeowner dues. The cost of utilities will also vary a lot depending on the climate and your type of heat etc. In my case (house in Northeast without central air), oil/electricity/water/propane average out to the $300ish/month range.

[op00to]

You pay the HOA, they pay for maintenance of common areas.

[cthalupa]

Hmm. Gotcha. I didn't take into account utilities being paid for - that can certainly be a pretty massive difference.

[Overtonwindow]

I think the 20% number is a misnomer. It's a good number to have, but I think you can get away with less. I have good credit, not super great, but good. I have some student loan debt. I have some credit card debt. However I was still only required to put down $10,000 with an interest rate of 3% to get my home. For me, when I added up mortgage, interest, insurance, and basic bills, it was still less than living in An apartment.

[cthalupa]

20% is the number required to avoid having to pay PMI