With increasing rent prices, purchasing a home has become an appealing option for those facing the decision to renew a lease or start the home buying process. According to an article by Fox Business, it states, “Annual rent growth is forecasted to be 3.6% in 2022, with rising rent expected in every major U.S. housing market.” This, along with other factors, are turning more renters into homeowners. Homeownership provides many benefits that aren’t available to you while you are renting.
Here are a few reasons to consider purchasing a home instead of renting.
1. A home builds equity.
Unlike renting, purchasing a home can help you build equity. When you make your monthly rent payment, you’re paying the landlord for allowing you to live in property that they already own. When you make your monthly mortgage payment, you are paying down the principal balance on your loan. The more you pay toward your principal loan amount, the more equity you gain in your home. Equity is the amount of money you have paid into your home through your mortgage loan. You can use this money for home repairs and improvements, as well as other financial needs, through a Home Equity Line of Credit. An additional way you can build equity is if your home’s value increases over time. For more information on building your home’s equity, read How to Build Equity and Own More of Your Home.
2. Buying a home allows for a fixed monthly payment.
With increasing rent costs, many people are discovering that owning a home is a better long-term investment. In a report published by the New York Post, the cost of rent last year rose by an average of 4%. While rent continues to increase, fixed-rate mortgages are becoming an ideal solution to ensure you will continue paying the same amount year after year. When you’re renting, your landlord has the ability to increase you rent when it’s time for your lease renewal. When you have a mortgage with a fixed-rate, your payment stays the same regardless of raising rates, but if you escrow your insurance and property taxes into your payment, your payment may fluctuate. Property tax and insurance may change as property values and insurance rates go up.
Learn more about our fixed-rate mortgage loans.
3. You have the ability to make home improvements or upgrades to increase value.
Another advantage that homeowners have over renters is the ability to make home improvements or upgrades on their own terms. When you’re renting, your landlord usually doesn’t want you to make any changes to the property, including cosmetic changes, such as painting, replacing flooring, or adding new light fixtures. Simple changes like these can not only make your house more appealing, but can often increase the home’s equity and value. For more information on building equity through home updates, read 10 Home Updates That Quickly Increase Value.
Interested in making home improvements? See how a Home Equity Line of Credit can help.
While renting might offer a temporary housing solution, it’s not an ideal housing solution long-term. Owning a home allows you to make the changes to the home as you see fit, builds your equity, and allows for fixed, recurring monthly payments. If you’re interested in purchasing a home through First Bank Mortgage, find a home loan advisor near you.