Right now, there is a lot of debate out there about renting versus buying. We understand it is a tough market right now and it’s also difficult to find affordable rentals. Because of this, it’s important to talk about what makes the most sense financially when it comes to renting versus buying. After all, it’s about the numbers and your individual situation.
Obviously, everyone’s financial situation is different and that’s why it is great to talk with a loan officer who can assess your financial situation and needs when it comes to buying a home. The reality is, when you rent you are paying on someone else’s mortgage versus if you buy a home you’d be paying on your own mortgage. Let’s take a closer look at what makes the most financial sense. For example, a person who makes $3,500 per month will spend 27.7 percent of their monthly income toward rent. That is $957 a month. On the other hand, that same person who purchases a home will spends 17.5 percent of their monthly income toward their own monthly mortgage payment, which is $612. 50 a month. Pretty simple math, right? The question is, would you like to spend over $950 a month and pay rent towards someone else’s asset or spend $600 a month toward owning your own asset and having the ability to watch that investment grow over time?
Benefits to Owning a Home
It’s still a great time to buy and there are several benefits of owning your own home versus renting. The first is home ownership helps create long term stability. When you buy your own home with a fixed interest rate mortgage you will always know what your monthly payment will be as opposed to renting where the landlord may surprise you with a rent increase at the time your lease is renewed annually.
The second benefit is the pride of home ownership. You’re now responsible for taking take care of something you call your own. You can even paint the rooms in your home any color you want, decorate how you’d like, take care of a yard and grow a garden if you’d like. These are all things that bring a different kind of enjoyment and satisfaction that only comes along with owning your own home.
The third benefit is building equity in your home. Over time a home will usually become more valuable than what you paid for it and can appreciate in value. This is great news because a rental can only provide you the money you initially invested in a security deposit.
Buying a home versus renting is not an easy decision to make. After all, it is a long term investment that you’ll have for quite some time, so you’ll want to be sure home ownership is right for you. That’s why it is so important to partner and talk with a good REALTOR and lender who can help guide you through the process, help you understand the market, and the financial decisions you will make when it comes to buying or even saving to purchase a home in the future. There are often loan programs available (especially for first time home buyers) to help your dream of home ownership become a reality even when you think it may not be possible depending on your financial situation.
Go ahead and start the conversation today, you have nothing to lose. In the end, once your financial situation has been assessed you can decide if now is the right time for you to buy versus rent. If you’d like to understand your financial situation better to help determine if you are ready to buy versus rent, please contact me today. I’m happy to help you not only do the math but find the home of your dreams.