If you’re unsure of whether you should buy a home or continue renting, the statistics are strongly in favor of buying.
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Today I want to talk about the cost of renting versus the cost of buying a home. I always preach to my boys and their friends that they should save their money and invest in real estate. Why pay someone else’s mortgage when you can pay your own mortgage and build equity in a home?
A recently released report regarding homeownership revealed that 37% of American homes are tenant-occupied and only 63% are owner-occupied. It’s difficult to imagine that more Americans couldn’t be enjoying the American Dream. What’s ironic is that many of them think they can’t afford to buy a home, so they end up buying a home for their landlord.
Most people don’t realize, however, that buying a home costs significantly less than renting one. The mortgage payment—including taxes and insurance—will typically be lower than the rent you might pay for a similar home. Plus, you won’t have the real estate tax or interest write-off when tax season arrives.
By buying instead of renting, you can save 15% of your income.
Historically, the difference between renting or buying a home has been relatively marginal. By February 2017, though, the difference was staggering and strongly in favor of buying. The percentage of income needed to rent a median-priced home today is 30%, while the percentage of income needed to buy a median-priced home is only 15%. Imagine saving 15% of your income. That’s huge!
Renting precludes you from enjoying the advantages a home has as a leveraged investment. Before you renew your lease this spring, find a Realtor or lender to help you crunch the numbers. They’ll help you see how you can reduce your housing costs in order to own a home of your own. Why rent when statistics show that homeownership would cost a mere 15% of your income compared to 30% if you’re a tenant?
We would like to help you achieve the American Dream of homeownership. Whether you’re looking to buy a home or you have a home that you want to sell, we have both buyer specialists and listing specialists ready and waiting to assist you. Just give us a call or send us an email and we’d be glad to help you.
