Sometimes biting the bullet and buying a home can make more sense than renting. We know it can be scary and you may think you can’t afford it, but you may be supposed to find out that it makes more sense to do so.
Compare Offers from Several Mortgage Lenders.
Today you don’t need large down payments or lengthy employment histories. Lenders are able to be much more lenient with their mortgage approval guidelines. As long as you can prove that you are a stable and reliable borrower, there may be a mortgage program out there for you.
So when does buying make more sense than renting? Keep reading to find out.
Is Your Rent Increasing?
Rent typically increases each year. As it gets more expensive, it can get harder to afford. As you struggle to make that higher rent payment, you don’t get anything in return. If you were to pick up and leave next month, you’d leave with the money in your wallet and that’s it – you don’t have any equity in the home. The money you paid for rent belongs to the landlord and not you.
When you have a mortgage and you decide to move, you sell the home. In a good market, you’ll sell the home for more than you bought it for or at least more than what you owe on the mortgage. You get to pocket the difference. That’s your equity or investment in the home. If your home appreciated, you made money on the deal – that doesn’t happen when you rent.
Do You Want to Make Changes to the Home?
Renting usually means you can’t make many changes to a home. Even if you want to just paint the walls you have to get the property owner’s approval. It doesn’t make sense to invest much of your own money into changing the home anyway because again, it’s not your home.
Click to See the Latest Mortgage Rates.
When you buy you can do what you want to the home (assuming you follow the city’s codes). This can give you the freedom you want to make your house a home. If you want to change the color of the walls, replace the flooring, or completely knock down a wall, you are free to do so as it’s your home.
Do You Have Investments?
If you currently rent you probably think you are too broke to invest. What if we told you that when you buy a home that you invest? The money you put into the home becomes your equity. Even a small down payment is an investment. On top of it, every time you make a payment each month, you invest more money into your home. A part of your payment will go towards the interest on the loan (paid to the bank), but the other part will pay down your loan’s principal. This automatically increases the equity you have in the home.
Many people think of owning a home as a forced savings account. Even though you don’t have the extra money to put away for savings or investments, you kill two birds with one stone with the mortgage. If you pay the loan off in full and sell the home, the money you earn is yours – it could be the greatest investment you make in your lifetime.
Do You Have an Emergency Fund?
Your home’s equity can even count as your emergency fund. Let’s say you have 30% equity in your home and disaster strikes. You suddenly need a few thousand dollars. If you don’t have it in a liquid account, you can refinance your mortgage and take the cash out of your home’s equity. Yes, it will decrease your investment in the home, but it will also bail you out of whatever emergency you suffered.
If you were renting, you wouldn’t have that emergency fund. Any money you paid towards the rent would become the property owner’s emergency fund. If you ran into a disaster, you wouldn’t have the luxury of refinancing to gain access to your funds.
Of course, buying a home isn’t for everyone. You have to be able to manage the property, keep up with the maintenance, pay the taxes and homeowner’s insurance. It does have its downsides, which you’ll have to compare with the benefits to see if it’s worth it for you to buy a home.
Click Here to Get Matched With a Lender.