Are you renting because the idea of paying a mortgage makes you uncomfortable? Here’s the thing, it’s unavoidable. Everyone pays a mortgage.
It’s something that a lot of folks don’t think about but it’s true. You may be renting but your still paying a mortgage. You’re paying your landlords mortgage.
A recent paper from the Joint Center for Housing Studies at Harvard University expresses it this way:
“Households must consume housing whether they own or rent. Not even accounting for more favorable tax treatment of owning, homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord plus a rate of return. That’s yet another reason owning often does—as Americans intuit—end up making more financial sense than renting.”
Freezing Your Housing Costs
Here’s another interesting idea that a lot of people (both renters and home owners) don’t think about. When you purchase a home with a 30-year fixed rate mortgage, your ‘housing expense’ is frozen…unless you change your loan, the check you write each month for that loan will be exactly the same.
Do you imagine that your rent will go up in cost over 30 years? We could guess that it will. In fact, rents are going up at a rate of about 3% nationally and even faster here in California.
Forcing Savings
Another important point, as an owner, the mortgage payment has the impact on your finances of being ‘forced savings’. Much like a holiday saving account, your monthly mortgage payment will allow you to have equity in your home you can tap into later in your life.
As a renter, you guarantee the landlord is the person with that equity.
Whether you are looking for a primary residence for the first time or are considering a vacation home at the beach, owning might make more sense than renting since home values and interest rates are still at bargain prices.
Call us with your questions and to learn more about your opportunities. 888-333-0075
