Every year at the end of the lease, renters are faced with the same dilemma: keep renting for another year or is it time to buy a home? The answer depends on their current situation and future plans, but there are many benefits to homeownership every renter should consider. Buying a home is a major financial decision for anyone, and it most certainly is the quintessential american dream. Aside from the pride of being a homeowner there are many practical benefits of homeownership.
Here are a few reasons why renters should consider owning a home before they sign a lease for another year!
Rents Are Rising Quickly
Being a renter, you are at the mercy of your landlord’s lease agreement, and rents tend to rise annually. Rent increasing each year isn’t new. Looking back at Census data confirms rental prices have gone up consistently for decades (see graph below):
If you’re a renter, you’re faced with payments that continue to climb each year. Realtor.com recently shared the September Rental Report, and it shows price increases accelerating from August to September (see graph below):
As the graph shows, rents are still on the rise. It’s important to keep this in mind when the time comes for you to sign a new lease, as your monthly rental payment may increase substantially when you do.
However, with a fixed rate mortgage your monthly payment will stay the same which will allow you to create a better budget and will be a great sense of relief that your housing costs will stay the same. Plus, it adds to your wealth by building home equity.
Renting Means Missing Out On Equity Gains
One of the most significant advantages of buying a home is the wealth you build through equity. When you own a home, every payment brings you closer to paying off your mortgage and fully owning the home which adds to your total wealth. This year alone, homeowners gained a substantial amount of equity, which, in turn, grew their net worth.
As a renter, you miss out on this wealth-building tool that can be used to fund your retirement, buy a bigger home, downsize, or even achieve personal goals like paying for an education or starting a new business. Owning a home could mean you are saving money for your future, and it may even enable you to leave as an asset for future generations to inherit.
Freedom to Customize Your Home
The big part of making a house a home is adding your personal touch and customize it the way you want it. Owning a home means the freedom to customize your home the way you want without having to worry about losing your security deposit. This is a big decision-making point if you want to be able to paint, renovate, and make home upgrades. In many cases, your property owner determines these selections and prefers you don’t alter them as a renter. As a homeowner, you have the freedom to decorate and personalize your home to truly make it your own.
Owning a Home May Provide Greater Mobility than You Think
You may choose to rent because you feel it provides greater flexibility if you need to move for any reason. While it’s true that selling a home may take more time than finding a new rental, it’s important to note how quickly houses are selling in today’s market. According to the National Association of Realtors (NAR), the average home is only on the market for 17 days. That means you may have more flexibility than you think if you need to relocate as a homeowner.
Your Monthly Mortgage Payments Can Be Less Than Your Monthly Rent
Believe it or not, if you have a good credit score and good credit history, your monthly mortgage for some homes can be lower or very close to what you are paying for rent right now. For a $500,000 condo in Jersey City, if you get a 30 year fixed rate loan, your average monthly payment would come down somewhat close to $2300 with a 3.4% mortgage rate and compared that to the monthly rent for such a condo which would be around $2000. So now you decide, which is better, renting or buying?
Deciding if it’s the right time for you to buy is a personal decision, and the timing is different for everyone. However, if you’d like to learn more about the benefits of homeownership, let’s connect so you can make a confident, informed decision and have a trusted advisor along the way.