Sometimes it just makes more sense to buy a home rather than rent it. This may seem the opposite of what you always hear or you may think that you’d never qualify to buy a home, but you might be surprised. Buying a home has its benefits for certain people.
If you fall under any of the following situations, you too may be better off buying a home rather than renting.
Home Prices are Increasing
Do you have your heart set on staying in the area that you rent? If home prices are continuing to rise, you might find yourself unable to afford the prices any longer. Even rent may become unaffordable as rent usually increases on a yearly basis.
If you want to lock in the price of a home now, you may be better off buying a property now. This way you get the home for today’s lower price before values skyrocket. The advantage of owning a home when values do go up is that your equity increases tremendously too. Rather than a landlord making the money on the increasing market, you make it.
You Plan to Stay Put
If you don’t see yourself moving any time soon, why not make a little money on a home? When you rent you don’t get any equity. The landlord earns all of the equity in the home. You don’t even get the tax write-offs for the taxes that you pay.
If you know you’ll stay in the home, you can buy it and maybe even have a payment that is close to the amount of rent you were paying. When you own the home you have many more benefits including making money on the equity. If you do decide to move after a few years, you stand a good chance of selling the home for more than you bought it. Your investment will have paid off whereas if you rented, you’d walk away empty handed.
You Don’t Have Any Investments
Have you ever heard that a home is like a forced savings account? It’s true. You have to make your minimum housing payment each month. A part of that payment covers the interest on the loan, which you won’t see again. But another part of the payment pays down the principal. That gives you equity in your home. It’s like investing without really realizing it.
While you can’t do much to make your home appreciate unless you make improvements that affect the home’s value in a positive manner, many areas appreciate naturally. Even if you just stay in the home and don’t make any major improvements, chances are that after a few years you will earn a profit as the home appreciates. If you don’t have money invested anywhere else, you at least have the knowledge that you have home equity that you can enjoy in the future.
You Want a Place to Call Your Own
While you use the address of the house you rent as your own, it’s really not ‘your home.’ You can’t make changes to it and you really can’t make it a ‘home.’ You might not know from year to year if you’ll have a home to live in either, as the landlord can decide to sell the home upon expiration of the lease at any point.
If you want a place to call your own and where you call the shots, you are better off buying a home. Unless you know you’ll move in the near future or you can’t qualify for a mortgage (but there are many options), buying is often better.
If you think you won’t qualify for financing, make sure you explore the FHA and USDA options. Both of these government-backed loans provide low down payment requirements and flexible underwriting requirements. Many people that never thought they’d be able to buy a home are now able to with these great financing programs.