“Either way, you’re still paying a Mortgage”
Not everyone owns their own home, plenty of people still rent because they don’t want to take on the obligation of a mortgage. Unless you are living somewhere rent free, you are still paying a mortgage- either your mortgage or your landlord’s mortgage. As an owner, the mortgage payment is a ‘forced savings’ so you have equity in your home you can access later in your life. If you are renting, you guarantee the landlord is the person with that equity. As a renter, you’re paying a mortgage without any of the benefits. As a paper from the Joint Center for Housing Studies at Harvard University explains:
“Households must consume housing whether they own or rent. Not even accounting for more favorable tax treatment of owning, homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord plus a rate of return. That’s yet another reason owning often does—as Americans intuit—end up making more financial sense than renting.”
Not to mention if you purchase a home with a 30-year fixed rate mortgage, your housing expense is guaranteed and locked in over thirty years for the most part. If you rent, the only guarantee that you have is your rent increasing over the same thirty year time period. In a recent statement released by Zillow, they said “The affordability of the nation’s rental inventory is currently much worse than affordability of the country’s home sale inventory.” They revealed two things: Nationally, renters signing a lease at the end of the second quarter paid 29.5% of their income to rent and secondly U.S. home buyers at the end of the second quarter could expect to pay 15.3% of their incomes to a mortgage on the typical home.
HousingWire recently reported that analysts at Nomura believe:
“It’s not that Millennials and other potential homebuyers aren’t qualified in terms of their credit scores or in how much they have saved for their down payment. It’s that they think they’re not qualified or they think that they don’t have a big enough down payment.”
Don’t get caught in the renting trap, look into home owning today and have a professional help you determine if you are eligible for a mortgage.
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