The housing market, after seeing some tough years, is on the up and up. While some of it has to do with millennials becoming a large force of first-time home-buyers as they climb the corporate ladder and pay off student loan debt, much of it also has to do with rising costs of rent. Renting became an incredibly popular choice during the economic recession because it kept people free from financial commitments, especially those too timid to secure a home investment when factors such as jobs and salaries were uncertain.
However, as the popularity of renting continued to increase, so did rent prices. And now, as the economy finds itself in a better position, with consumer and investor confidence up and employers hiring again, renters are finding that investing in a home is a better option for their wallets and their futures.
According to a report by RealtyTrac, in 76 percent of U.S. counties monthly mortgage payments are as noted by HousingWire. The report included 461 counties across the U.S.
"From a purely affordability standpoint, renters who have saved enough to make a 10 percent down payment are better off buying on the majority of markets across the country," said Daren Blomquist, vice president of RealtyTrac. "But factors other than affordability are keeping many renters from becoming buyers, a reality that means real estate investors buying residential properties as rentals still have the opportunity to make strong returns in many markets across the country."
While some might be skeptical, the real scenario is that more young people are turning to buying over renting. But in what ways, specifically, is purchasing a home cheaper than renting one? Consider the following reasons:
It's like paying yourself: When you pay your monthly rent, you are paying it to a landlord. While this secures your living space every month, this is money you will never see again. This is not the same when it comes to purchasing a home, in which you take out a mortgage and pay it down. Though it doesn't happen overnight, Total Mortgage noted the biggest benefit to your monthly mortgage payments is the fact that the mortgage continues to get smaller, allowing you to eventually. Rent is not something you can eliminate or pay off. In fact, it is only customary for rents to increase, as has been the trend. Mortgages, on the other hand, can be wiped away and leave you as the sole owner of the house.
Fewer restrictions: When you buy a home, you have freedom in everything from pets to renovations. Renting comes with many restrictions, causing you to search a bit harder to find what suits your needs. When it comes to purchasing a home, Mortgage Calculator noted you have the. If you purchase a house and end up remodeling a great deal of it, you can increase the value over time. This is not true when renting a place, in which you have no control over the renovations or financial improvements. Similarly, even if you did, the property is not yours to see a return on. But if you own a home, then those improvements and increased value will come back to you in the end.
Tax deductions: Mortgage interest and private mortgage insurance can be written off when it comes time to file your taxes. This is a nice little bonus when tax season comes around, because by reducing your taxable income, you can lower the amount you owe in federal taxes, or you could see an increase in your refund. Either way, you are able to deduct more when owning than you can when renting.
If you are a renter and spending more than you want, but have a steady income and plan on being in the same place for the next five to seven years, then maybe purchasing a home is a better option for you. If you think purchasing might be the right choice for you, be sure to take a look at your budget, and speak with both a real estate agent and an escrow agent to find out how to make the purchasing process as simple as possible. Make sure you have professionals in your corner before embarking on a shopping trip of this magnitude!