3 Ways Renters Lose Money: Renting Vs. Home Ownership

Home-Ownership-vs-RentingAre you still renting a home or apartment for yourself or your family?

If so, you’re losing money. Think about these three ways you lose money by renting:

1.  You’re paying for someone else’s mortgage payment. You’re missing out on the appreciation that the property gives to the landlord. Appreciation is a term used in accounting relating to the increase in value of an asset, which means in real estate terms, added value to the property.

2.  Renters don’t get to freeze their monthly housing expenses like home buyers can. By getting a fixed rate mortgage, you can guarantee consistent payments over the life of the loan. It’s advisable to refrain from entering into an “Adjustable Rate Mortgage” or better know as an “ARM” since they are just that, “Adjustable” and usually not in your favor.

3.  Renters don’t benefit from tax advantages. Home owners get income tax deductions. Tax deductions for interest costs, for instance, save tax payers thousands of dollars.

Emotional Satisfaction of Home Ownership:

Besides losing out on making money with real estate, renters don’t get the same satisfaction of home enjoyment that benefits home buyers. Many landlords won’t allow you to paint your walls in colors that you desire. Also, you won’t feel like fixing up the property with custom window coverings and you get little say in flooring materials. Because you can’t make your personal statement, you won’t feel like you’re HOME as much as home owners who feel emotionally connected to their property.

How to Buy Your First Home:

The biggest barrier to home ownership is often accumulating funds for a down payment. People think they have to have thousands of dollars for a down payment. However, if you have good credit and a decent job, you can get a mortgage for a home for 3.5% down by going FHA. And you can finance some of your closing costs as well as ask the seller to help you pay a good portion of your purchase costs. With today’s mortgage rates at an all time low,  you may be surprised to find out how much of a home you can afford with payments similar to what you currently pay in rent.

Talk to a mortgage loan officer and see how much of a home you can afford. If you need a recommendation on a loan officer don’t hesitate to call us.

If you’re renting, consider making one of  your priorities to buy your own home.