Homeownership is a personal choice with many deciding factors. Most people don't know that buying a home may actually cost less than renting. And with low rates and an improving economy, now may be the best time for you to make the move.
If you’re unsure which option is right for you, here is some information that may help you make the best decision for you and your family.
The Cost of Rent Isn’t Going Down.
Rental rates across the country are surging and don’t appear to be slowing down anytime soon.. Despite these increases, most renters’ incomes have not gone up, raising an issue of affordability. In the last decade, the number of renters spending more than half of their incomes on rent has risen from 7.5 million to 11.4 million. That’s a lot to be spending on housing each month. These days, it’s cheaper to own a home. Home buyers can expect to pay about 15.3% of their incomes on mortgages.
Renting may provide you with more leftover cash each month, but then renters are vulnerable to rent increases every year.
Buying a home may provide you with income tax benefits,* and gives you the chance to increase your personal wealth by building equity. Equity is the difference between the market value of the home and what you owe on your mortgage. Just remember, home values can rise or fall with time, so building equity is not guaranteed. Also keep in mind:
- Would you need to make changes in your budget to buy a home?
- Would buying allow you to still maintain your other savings goals and stay prepared for potential costly home emergencies, such as a new roof or heating/cooling system?
- You will need to determine how much it'll cost you in property taxes, insurance, utilities and homeowners' association fees (if any). All of which will add to your monthly expenses.
- Are you aware that housing is a fluctuating market and that the value of your home may decrease – or INCREASE – depending on the market?
- Are you ready to take on the responsibility of home repairs? Homeowners pay for repairs and upkeep rather than the landlord.
To see if homeownership is affordable for you, use our mortgage calculator to explore various rent, mortgage or refinancing options.
Buying your first home can be an intimidating process, but it doesn’t need to be. The first step is to make these initial decisions and then talk to a PrimeLending loan officer. We’ll help you compare all your options and walk you through all the steps.
*PrimeLending is not authorized to give tax advice. Please consult your tax advisor for tax advice for your specific situation.