There are many reasons why consumers should own instead of rent and especially while mortgage rates are still low. Especially over a long term basis, homeownership quite simply makes more sense than renting.
Reason #1: Mortgage rates are low Rates are slowly rising and are about 1% higher as compared to a year ago. A rate of 4.5% on a 30-year mortgage is still very cheap from a historical prospective. Lower rates are very significant as in many cases they make it more affordable on a monthly basis to own a home than rent.
Reason #2: Live your life your way Do you want to landscape your yard, build a swimming pool, add another bedroom or maybe remodel your kitchen? Maybe you have decided you would like to buy a new pet for the family. These ideas are virtually impossible to make a reality when you are renting. Most landlords are not interested in spending the money to update anything and many will not allow pets under any circumstance. The freedom to make your home truly your own is one of the best reasons to buy a house.
Reason #3: Personal Credit Benefits You obviously must have good credit to buy a home in today’s market. The additional benefit of a mortgage is that your monthly payment will be reported to the three credit bureaus and in almost all cases the rental payment will not. A long history of on-time mortgage payments will demonstrate financial responsibility and be an indication of general financial stability.
Reason #4: Home Equity Building equity in your home is a big incentive for homeowners. Having equity in your home can make it much easier to get a loan for almost anything else. Equity allows you to help pay for emergency expenses, home improvements or your children’s college tuition.
Reason #5: Better long-term financial health Buying a home is better for your financial health over the long haul compared to being a lifelong renter. In simple terms would you rather purchase a home and finance it for 30 years so that at the end of those 30 years you have a home you own free and clear and hopefully has appreciated in value significantly. Or would you prefer to pay rent over that 30 year period realizing that rental rates generally rise over time and you will have absolutely nothing to show for all the money you have spent.
Owning your home will provide a 3%-5% annual return on a long-term basis. In reality, this is still far better than paying out hundreds of thousands of dollars and not building any equity whatsoever. I think you would agree that homeownership is still the smart decision! Source: The Motley Fool
Steve Lester is a REALTOR living in Allen, Texas.