There was some good news for buyers this week as mortgage rates continued a recent downslide. So, if you are questioning whether you should buy or rent a home, now may be a great time to lock into a rate.
Buying is often considered to be financially better than renting over the long run because your mortgage payments build equity in your home, which you will eventually own, while rent only goes toward the upkeep of your home and the pocket of your landlord. That is just one reason buying is better than renting.
Here are some others:
- YOU CAN DO WHAT YOU WANT WITH YOUR PROPERTY
Making home improvements will be your choice…from colors to paint the walls to light fixtures to types of floors, you won’t need permission from a landlord to make changes.
- TAX BENEFITS
Tax deductions are a great perk of home ownership.
- STABLE MONTHLY PAYMENTS
Rents can go up, but with a fixed-rate mortgage, your monthly payments won’t change.
- FORCED SAVINGS
Renting might seem less expensive, but would you actually save the money you don’t spend on rent? Since your mortgage payments are building equity in your own home, which you can later sell for profit, it’s like a forced savings.
Using a Rent vs. Buy Calculator you can see how buying is a better financial option than renting. For example, after 4 years, the cost of homeownership (down payment, mortgage, taxes, etc.) for a $300,000 home would be $143,564. The total cost to rent the same house for that period would be $102,022. Renting would leave you with $41,543 in your pocket (including the money you didn’t spend on a down payment). So, it looks like renting would be better financially, right?
But wait…not so fast.
Let’s look at what you gain over the same 4-year period if you buy. After 4 years, your home will have $79,736 in equity. However, if you instead rent and invest your down payment and the other money you save at a 6% return rate, it will earn around $8,351 in 4 years. So, if you look at your gross costs, equity, and investment potential, it’s better for you to buy than rent if you plan to live in your home for more than 3 years and 9 months.
The bottom line is, if you’ve been thinking about buying a home in the Montgomery area, don’t wait! Start investing your money in your own home vs that of a landlord today!
If you are in the market to buy or sell a home (or both), let me Sandra Nickel, and my Hat Team of Professionals assist you with all your real estate needs! Call us today at 334-834-1500 and check out https://www.homesforsaleinmontgomeryalabama.com for more information.
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