Buy vs Rent: 5 Reasons You Should Buy A House
By: Mark Harrington
Are you currently renting? I am sure you have wondered if buying a home would make more sense! Below I give you some thoughts to help you decide for yourself.
1. Mortgages are Less Expensive:
Rates are at an all-time low again, but even at 4.5% interest rate, 30-year mortgages are still very inexpensive on a historical basis. In the Windsor CT market, $220,000 gets you a nice three-bedroom & 2 bath home with a $1,550 monthly mortgage payment (includes taxes, home ins., and mortgage insurance). The same house would easily command $1,650 per month in rent.
2. Your Home, Your way:
The freedom to make your home your own is one of the best reasons to buy a house. Want to landscape your yard, a pool, paint a bedroom pink, remodel your bathroom? GO FOR IT! Want a pet? If you're a dog owner, finding an apartment can be a nightmare and most rentals do not look like what you would have in your home (i.e. dated kitchens & bathrooms).
3. Mortgages Are Better Credit Builders:
Simply…Rental Owners and/or Company’s almost never report your rental payments to the credit bureaus. There are few items on a credit report that demonstrate financial responsibility and general stability in life better than a long history of on-time mortgage payments.
Having equity that can be borrowed if necessary is a big plus for homeowners. It can help pay emergency expenses, home improvements, or your kid's college tuition.
5. It’s Better For Your Long Term Financial Health:
Even though it’s not necessarily a good ‘investment’ (like mutual funds/stocks/bonds which can appreciate at a higher rate), it is still much better for your long-term financial health than being a lifelong renter.
Let's say you buy this $220,000 house in Windsor, and you put $22,000 down. This would make your mortgage payment about $1,100 for 30 years at a 4.5% interest rate (includes $98/month for mortgage insurance, which would go away at 80% loan-value-ratio). At the end of the 30 years, you own the home free and clear, and hopefully it's appreciated significantly in value.
If you pay the $1,650/month in rent for 30 years, you'll have paid a total of $594,000 in housing payments. This is also a best case scenario, as rental rates usually rise over time, making your actual total even more. After 30 years, you'll have absolutely nothing to show for all of the money you spent.
Homeownership is still the better way to go!
If you have decided renting is not for you any longer, please call us to get pre-qualified. We will teach you how to make this happen and show you how much you qualify for. Even if you are not ready right now, it still makes sense to get pre-qualified and put your plan together for a future Home purchase.