Buying a Home Still Beats Renting
Are you thinking of buying a home and wondering what the benefits are of ownership versus renting?
There are some obstacles that first time home owners face including student debt and a lack of appealing homes from which to choose in the area they desire. However, if it’s possible to handle the payments on the mortgage then chances are the risk of buying will prove beneficial.
When you take into consideration the average cost per month of owning a home and compare that to renting, in general, it can cost more to rent. This even includes some of the more expensive areas of the country.
Let’s break it down a little…
At the start of buying a house, there are extra expenses:
- closing costs
- realtor fees
- moving costs, etc.
This may seem daunting. However, once settled into your home for a bit you will start to see the benefits. the Chicago metro area as an example. According to Zillow.com, the median value of a home in this area is $211,000. With 10% down on a 30-year mortgage, with an interest rate of 3.79, that’s a monthly payment of $1213. Compare that with the median rent in the same area which is $1695…Yikes!
Most people, when buying a home, plan on staying in that dwelling for quite a long time. Stable jobs, social attachments, schools, and job markets all play a part in the length of time a person or family stay in one house. Also, when paying a mortgage, the amount you owe gradually decreases, whereas rent usually increases year by year.
Owning real estate can still be a positive investment even when the economy fluctuates. Over the last 100 years, the U.S. GDP (gross domestic product) has increased about 2% annually. Since the GDP is the total value of everything produced by both citizens and companies is the US, that’s a good thing. Recently, we saw a climb in the stock market and in home value as well. With these factors, if home owners are saving and investing over the time they own their home, that’s another benefit of owning vs. renting.
Statistics aside, it’s the American Dream to own your own home. You can make a home what you want and put your personal details and personality into it with no limits (creatively speaking). When renting, the landlord has the choice of selling the property, resulting in your being forced to vacate and find other residence.
Given the freedom of ownership, it is important to remain sensible when deciding to buy a home. Take careful consideration when it comes to size, location, and amenities. Look at your budget, analyze your short and long term needs (retirement, college tuition, etc.) and make a decision based on facts and the reality of your financial and personal situation.
For example, ask yourself: “do I really need that swimming pool? Do my children really require a playroom with a home theater?” Also, think about your retirement. Too large of a mortgage can take away some of the savings put toward retirement.
Buying or renting is a personal choice. As long as you stay sensible and true to your unique situation, the decision to become a home owner should prove to be a wise investment in the long run.