Torn between buying or renting a house? The best choice couldn’t be any more obvious. But why? Up next, we’ll look at three reasons why a home purchase is the way to go when contemplating buying vs. renting.
1. Buying means building personal equity
In case you’re unfamiliar with personal equity, the definition is pretty straightforward. Personal equity is the total sum of all your assets. Your assets are made up of your savings, earnings, investments and real estate. And, of course, your real estate includes any home you own. So the more personal equity you have, the better. And one of the best ways to build equity is to buy a home and pay your loan off as quickly as possible. The more of your loan that is paid, the more equity you have in your home. In other words, if you’ve paid off your home in full, all the money you collect from a home sale will go straight in your pocket.
If you’ve paid 80%, then 80% of the money from the sale will be yours, etc. In this latter case, the remaining 20% would go toward paying off the remaining loan balance. But even a little home equity is better than no home equity. And no home equity is exactly what you’ll have if you choose to rent. Instead of building personal equity with your monthly payments, you’re simply padding the pockets of a landlord. Wouldn’t you rather invest in you?
2. Buying gives you autonomy you won’t have as a renter
Don’t like how the walls inside your residence are painted? Tired of that unsavory carpet? If you’re a homeowner, you can do something about such decor. That is, it’s well within your rights as a homeowner to replace anything on the inside or outside of your home. Talk about autonomy at its best! Renting is a much different story, however. If you grow tired of how something looks or wish to knock out a wall for extra space, you can just forget about it. The one who makes these decisions is the one who collects your monthly rent check. That would be your landlord. Not you.
When thinking about buying vs. renting a piece of real estate, ask yourself this question: Am I going to be OK with this property as is for the foreseeable future? If the answer is yes, then maybe renting is worth consideration. But if you think there’s any chance you’re going to want to make changes to the property, buying is your only viable option.
3. Buying helps you budget
If you get a fixed-rate mortgage, your interest rate and monthly payments will be locked in for between 10 and 30 years. The exact number of years depends on the terms of your home loan, of course. Nevertheless, whether it’s 10 years, 30 years or somewhere in between, you can sleep well at night knowing you’ll be paying the same amount in monthly mortgage for an extended period of time. This kind of continuity inevitably helps you maintain a budget and keep track of all your personal expenses. No such stability is promised for renters, however.
As a renter, your landlord could change your monthly rental fee any time he or she pleases. With inflation currently crippling much of the nation, it’s likely that your rent will soon increase – if it hasn’t already. One way to avoid this possibility is to take the homebuying route. Not only will you have a place you can call your own, but you can take a deep breath knowing your monthly payments aren’t going to budget anytime soon.
Have questions about buying vs. renting? Contact us today at Fairway of the Carolinas and let our trusted team of mortgage originators help you get started on a home purchase you won’t regret. If the reasons above aren’t enough to convince you that buying a home is a worthwhile investment, our team will help fill in any gaps or answer any questions you may have. Let’s connect soon!