Despite what just feels like the right answer, buying a home in Upper Marlboro can be significantly cheaper than renting one. Much of the reason has to do with short-term versus long-term considerations (buying a home starts with paying a sizable down payment, after all); but over the long run, the amount of cash at stake is so great it’s worth taking a hard look at this fundamental housing choice.
Four leading factors that currently come into play:
INCREASED DEMAND HAS MADE RENTALS MORE EXPENSIVE
After the subprime mortgage mess-between 2007 and 2013 –something like 6,200,000 people were added to the number of tenants. That boost created enough extra demand for rental units that owners had no trouble increasing monthly rates. It’s a simple case of too little supply chased by too much demand.
LOW INTEREST RATES MAKES HOMES CHEAPER IN THE LONG-RUN
The current unusually low interest rates makes the tradeoff with renting an easier call. This fall Upper Marlboro home buyers can expect to find 30 year mortgage packages at rates in the low 4% range. If interest rates rise considerably –which just about everyone expects –rental rates can be expected to rise proportionately as landlords cover the added expense. But those who buy an Upper Marlboro home lock in the lower interest rate: the ‘price of money!’
BUYING A HOME YIELDS PREDICTABLE CASH FLOW
When you buy an Upper Marlboro home, your mortgage comes with a repayment schedule that shows you exactly how much you are required to pay each month until the end of the loan’s term. With a fixed rate loan, the dollar amount will usually stay the same (or even fall as the mortgage nears its end). Conversely, unless a major change occurs in the rental market, rental prices will continue going up.
BUYING IS A LONG-TERM INVESTMENT FOR STABILITY
In addition to the price rise factor, renters will have to keep paying rent for a lifetime –while homeowners eventually get to stop making mortgage payments. Anyone buying a home in Upper Marlboro in their 30’s can expect to have paid for it before they reach retirement. That’s very good news, because their living expenses will go down around the same time they start making less money. In contrast, renting just keeps getting more expensive…which can put extra financial pressure on retirees.
If you find yourself to the point of renting or buying a home in Upper Marlboro, today’s rates should weigh heavily in your decision. If you find that it makes financial sense to buy, the next step is to call me!
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