What You Should Know About Renting vs Buying a House

It's widely known that homeownership builds wealth. Yet, most people who are currently renting may feel that buying a home is out of reach. Weighing renting vs buying a house can feel overwhelming, especially if you're a first time buyer. If you've been in the renting cycle for several years, you may feel like there's no way out of it. But never fear! In this blog, I'll give you the top reasons to ditch your landlord for good and start building your financial future.

Think it's cheaper to rent? Not even close.

As we know here in Rhode Island, rent prices can be exceptionally high. It turns out we're not alone. According to recent data from realtor.com, median rental prices have reached their highest point ever recorded in many areas across the country. The report revealed that the average monthly rent rose 5.5% in the last 12 months alone.

What does this mean? If you're considering renting vs buying a house and you are concerned about rising prices, now may be the time to consider purchasing a home. While rents continue to rise, monthly homeownership costs tend to naturally stay relatively steady. Purchasing a home helps you secure a consistent monthly payment, free from rent hikes.

Build your financial future

You may have heard recent headlines about home equity being at an all-time high - but even with high home prices, the money you're paying a landlord doesn't help you build wealth. Instead, it's lost forever.

Calling an expert mortgage professional to help you calculate how much wealth you could build with your current rent payments could save you hundreds of thousands over your lifetime. You’ll be shocked to see how much your rent payments could add up over the years. 

Think about it - if you're able to pay high rents, why wouldn't you able to afford a mortgage? There's also the possibility that your mortgage could be cheaper than your rent. The only way to know for sure is to partner with a trusted local professional.

When you weigh your options of renting vs buying a house, your monthly budget is likely top of mind. According to the National Association of Realtors (NAR), monthly mortgage payments are rising, but they're still significantly lower than the typical rental payment. NAR indicates the latest data on homes closed shows the median monthly mortgage payment is $1,204.

By contrast, the median national rent is $1,575, according to the most current data provided by realtor.com. In other words, buyers who recently purchased a home locked in a monthly payment that is, on average, $371 lower than what renters pay today.

Rental Prices aren't decreasing any time soon

Individual investors and large companies view real estate as a solid investment. That means that your rent check builds wealth for other people. Consider this: would you buy a rental property if you knew it wouldn't build your wealth?

Of course not. This means that choosing to rent over planning to buy is leaving you out of the wealth-building equation. The question becomes less about whether you can afford to buy a home but rather whether you can afford not to buy one.

Speaking with a qualified mortgage expert is a great way to strategize your financial goals with homeownership at the center.

Bottom Line

With rents continuing to rise across the country, renters everywhere are considering renting vs buying a house. There are multiple benefits to homeownership, including wealth building and securing your financial future. Let's discuss your options so you can make the most important purchasing decision of your life. Contact me today to get on the road to homeownership.