Renting VS. Buying
Many people struggle with the decision between renting and buying. While renting provides an excellent short-term and flexibility, it simply doesn’t make sense if you want to build wealth and plan to stay in a geographic area for five years or longer. Renting costs more money over time and does not provide the same benefits as owning your own home. Read on to learn some of the main reasons why buying is better than renting.
Cost of Renting VS. Buying
Despite what many people believe, renting is actually more expensive than buying. In addition to higher costs overtime, renting can also cost more on a month to month basis. Even though mortgage payments come with interest, interest payments are usually tax deductible. When you take this into consideration, there are very few situations where renting makes more financial sense than buying.
When you buy your home, your monthly mortgage rate can be fixed. This means it won’t go up based on rising home prices. This isn’t true with renting. When you rent, you’re subject to increasing rental payments as neighborhoods change and housing prices go up. A recent study published by the Orange County Register reported that as of June 2019, rental rates have increased 5.8% in 12 months, the highest increase since January 2008.
When you rent, a portion of your monthly payment goes towards paying for someone else’s loan reduction. Instead of paying to buy someone else a high-priced asset, you could be putting that money towards buying your own. When you buy a home, most of the money you spend on mortgage payments ends up back in your wealth portfolio in the form of home equity.
Buying a home has been long considered a key element of financial success. One of the main reasons for this is the fact that owning a home is an asset you can use as leverage for other investments or your eventual retirement. Investing in real estate is quickly becoming one of the most popular and successful ways to diversify your investment portfolio and ensure a steady income stream for years to come.
Access to Credit
Owning a home provides you with access to a large line of credit. Even though you shouldn’t use it unless you absolutely need to, you can take out a second mortgage on your home. This allows you to secure a loan payment much larger than what is available to a renter because the home is the collateral. Many homeowners take advantage of this fact when faced with unexpected expenses.
These are only a few of the reasons why buying a home makes more sense than renting. If you’re interested in learning more about available homes, we can help. Strategic Sales and Marketing offers real estate sales and marketing services. Our team has years of experience and understands the needs of potential buyers.
Please contact us for more information about our services.