Saginaw, Bay Counties Listed No. 2 and 3 in Michigan
By Rich Adams
Buying a home is one of the most important – and stressful – purchases anyone can make. The investment of several hundred thousand dollars into a house, with payments stretched out over 30 years, is undoubtedly the most expensive item a person will buy.
SmartAsset, an online financial technology company, recently completed a study regarding the best places to own a home. In Michigan, Saginaw County is ranked No. 2 and Bay County is No. 3 in the 10 best counties in which to buy a home.
The company gathered data on average home prices and rental payments and compared buying to renting in every county in the nation. The data is based on the number of years you plan on staying in your home. The formula compared the total costs of buying and renting a typical home or rental unit in each county for a household earning of $100,000 a year. The buy scenario assumed the mortgage rate is 4.5 percent, closing costs are $2,000 and a down payment of 20 percent has been made. It calculated the break-even point in buy versus rent, the point at which total costs of renting become greater than the total costs of buying.
In Saginaw County, the average monthly mortgage payment was $516, with the average rental amount being $1,026 a month. With house prices averaging $134,292, a homebuyer would reach the break-even point in 1.1 years.
For homebuyers in Bay County, monthly mortgage payments were calculated to average $589 a month for a $153,165 home. Rent was averaged at $1,060 a month. A person buying a house would attain a break-even point in 1.2 years.
Kendra Christensen, vice president of lending at Copoco Community Credit Union in Bay City, said the housing market has improved greatly since the subprime mortgage crisis in the late 2000s.
“This is definitely a better time to buy a home,” Christensen said. “The market has turned around, houses are still affordable and interest rates are low.”
Today’s housing market is also very competitive, and homebuyers are looking for anything that will give them a better chance of landing their dream home. Christensen said smart homebuyers get pre-approved for a mortgage before making an offer on a house.
“You want to get pre-approved. The market is hot, and if you are pre-approved your Realtor knows what to show you within your price range,” Christensen said. “It also makes your offer more desirable if you get in a bidding war. Some Realtors won’t show a house or write an offer if you don’t have pre-approval, because the Realtor is not sure if the sale is going to close.”
To obtain pre-approval, the lender will need to see your last two pay stubs and two years of tax returns. If buying as a couple, both parties must provide that documentation.
The median home value in the United States is $222,800, according to Zillow. The median list price per square foot in the United States is $151, and the average price of homes currently listed in the United States is $276,000. The median rent price in the United States is $1,637.
According to LendingTree, the average monthly mortgage payment in the United States is $1,029. Michigan is among states with the lowest average mortgage payments. In Michigan the average monthly house payment is $753, which represents 12.02 percent of the average property-owner’s income..
Forbes recommends you don’t fixate solely on the price of the house, but the overall costs involved with home ownership. Some of the extras are:
- Home insurance
- Homeowner association fees
- Real estate taxes
- Upkeep on extras, like swimming pools, heating and cooling systems and outbuildings
Can You Afford it?
One of the common guidelines to use is the debt-to-income ratio, according to thebalance.com. Your total debt-to-income ratio should not exceed 36 percent, and your mortgage debt alone should be less than 28 percent of your monthly income.
To calculate your debt-to-income ratio, first, add up your total monthly gross income and multiply it by 36 percent, or 0.36. This number is the maximum amount of monthly debt payments you should have, including your mortgage. Next, add up all monthly nonmortgage debt payments and subtract it from the previous total. This number will give you an approximate maximum mortgage payment you can afford. This amount should be 28 percent or less of your monthly income.