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The Best Reasons to Buy a House Instead of Renting
You’ll likely spend most of your adult life either renting or owning a home. There are pros and cons to both renting and owning. One could be cheaper in the short term, but the other may make more sense long term. Depending on your situation, you might find that renting is ideal for now but eventually, buying a house makes more financial sense. If you’re currently renting, you may consider purchasing a home as an investment that can pay off over time. That said, it’s not the right decision for everyone. Both renting and buying have advantages and disadvantages depending on your situation, financial circumstances, and long-term plans. Here are some reasons why you might want to buy rather than rent.
Buying Has Always Been a Good Investment
Buying a house is one of the best investments you can make. Real estate prices historically increase over time, which means buying a home can be a great way to build equity and increase your net worth. Over time, your equity will increase as you make payments on your mortgage and add value to your home. Buying a home may not be the best investment if you’re looking to get rich quick. But homeownership is an excellent investment in your future.
You’ll Build Equity as You Pay Off Your Mortgage
Equity is the difference between the value of your home and the amount you owe on your mortgage. You’ll build equity in your home as you pay down your mortgage. This can be helpful if you decide to sell your house or take out a home equity loan. When you buy a home, you’re loaning money from a bank and agreeing to pay back the amount you owe over time using the equity in your home as collateral. If you have a home equity loan, you’ll be able to borrow against the equity in your home. You may want to use this money to invest in yourself or start a small business.
Financing Is Becoming More Accessible for First-Time Buyers
Currently, there are many great mortgage options available to first-time buyers, including low down payment options and government-backed loans. If you don’t have 20% saved up for a down payment, you can still qualify for a mortgage as a first-time buyer. Government-backed loans like FHA loans, VA loans, and USDA Rural Development loans require just 3.5% down. If you’re renting and you’re thinking about purchasing a home, now is a great time to buy. Mortgage interest rates are still historically low. This is great for first-time buyers who don’t have a lot saved up for a down payment. Even if rates do increase, just remember, “Marry the house; date the rate.”
Buying May Be Cheaper Than Renting Over the Long Run
If you’re renting and you plan on staying in the same place for the long haul, you may want to consider the long-term costs associated with renting versus the long-term costs associated with buying a home. If you buy a home, you’ll likely have much cheaper overall housing costs than if you were renting. With a mortgage, you’ll have a fixed monthly payment that includes your principal and interest payment. Rent, on the other hand, is completely variable depending on where you live and the rental market.
Buying Helps Eliminate Rental Stress and Anxiety
Renting can be stressful. You have no control over the condition of the property you live in or the landlord’s ability to maintain the home. You can’t make any long-term plans with renting because you never know if your landlord is going to sell the property and kick you out. If you buy a home, you can make long-term plans for your family. You’ll also have control over the upkeep of your property. You can make repairs and replace worn-out or broken appliances, fixtures, and paint or wallpaper as you see fit.
Protection against inflation and rising housing costs
If you buy a home, you’ll likely have fixed housing costs that don’t increase much over time. Rent, on the other hand, is variable and can change from year to year depending on market conditions. If you’re worried about rising housing costs, buying a home may be a better bet than renting. The cost to own a home has generally risen slower than the cost to rent. While this trend may reverse in the future, rising costs for homeowners are typically offset by increasing equity in the home and rising property values.
Conclusion
There are many reason to buy a house. Buying a home is a big decision, but it can be a great investment if you do it at the right time. If you’re currently renting and you think you’re financially ready to buy a home, shop around and compare rates and terms with different lenders to see what type of mortgage you qualify for. With interest rates still at historical lows and inventory currently rising, now is a great time to buy. While the market may be more competitive than ever, there are also more options available for first-time homebuyers.
