Why Would I Buy with Interest Rates so High?

Rising home and rental costs in 2022 have led many people to weigh the pros and cons of each option. It’s common knowledge that renting is less expensive than purchasing a home, but when your rent is nearly as much as a mortgage payment, should you wait? Maybe buying a home makes more financial sense than renting.

However strange it may sound, buying makes more financial sense in most cases. Here’s why.

It’s More Cost-Effective in the Long Run

The real estate market changes. Today, everything is different from the situation in 2020. However, one thing is always true when buying vs. renting: you lose the money you spend on rent. Renting a home prevents you from accumulating equity because you are paying for someone else’s property each month.

A house is a significant investment and may be costly at first. But, when you include the ongoing costs of renting versus purchasing, you’ll find that buying is more cost-effective in the long run.

Depending on the market, the cost of purchasing a property may be roughly the same as renting. It makes far more sense to put your money toward paying off something you own rather than someone else’s property.

You Can Settle Down

A home’s ownership may be a source of pride and security. Rather than a landlord, you stand to gain from the long-term investment value of your money toward your mortgage and home improvements each month. Renters don’t get the satisfaction of investing in a house and seeing it grow in value; they never get to claim ownership of the property.

Buying a Home Makes More Financial Sense than Renting because You Have Lower Living Expenses

Over time, homeowners may save money by avoiding renting. That is one of the reasons why buying a home makes more financial sense than renting. The initial investment in a home, the purchase price, is the most considerable single expense in home ownership. After they pay off the mortgage, homeowners are responsible for the ongoing costs of property ownership, such as taxes and upkeep. However, these recurring costs will almost always be far less than the rent for a similar dwelling in the same general area. Buying a house offers the attractive prospect of ending your reliance on rent and mortgage payments.

Building Wealth

You can use a home’s equity as a foundation for a secure financial future. There is more to a home’s worth than merely providing shelter.

It is common knowledge that the value of the real estate increases with time. Homeownership is the single most reliable way to improve one’s net worth. Plus, most homeowners renovate before they sell, so you will usually start with a clean slate.

Investing in real estate and giving it the time it deserves will pay off in the form of steady appreciation over time. One of the finest ways to amass long-term wealth is through property ownership, and you don’t need to be already affluent to get started. Your principal residence is all that is necessary to make a significant impact on your net worth.

Stability

For many people, house ownership provides indescribable benefits like peace of mind and security. Buying a home ensures that your kids will always have a safe and secure living space, access to a quality school district, and a community of friends who live close by.

Landlords often have the right to raise the rent anytime or whenever a lease is up for renewal. That’s why tenants can get caught off guard by rent increases. There is little risk of inflationary pressures when you own a home because your mortgage payment is a fixed sum, and your property is likely to increase in value over time.

Landlords have the power to raise rent and legally remove renters by following the terms of the lease agreement, which typically includes giving the tenant a certain amount of notice. If a tenant refuses to pay the increased rent or the landlord sells the property, the landlord will evict the tenant in both cases. As a result, the renter is in the stressful position of quickly locating a new home. However, homeowners won’t be stressed over a third party buying their home without their knowledge.

You Can Make it Your Own

Need to renovate your outdated kitchen or bathroom? When the buck stops at your house, you get to decide. If you own a home outright, you have complete creative freedom in decorating and maintaining it. The freedom from worrying about these things is a significant selling point for house ownership for many people. You can bring in the stuff from your last place, too. You can have a simple transfer with the pros after hiring interstate movers when moving from Colorado to Texas. Decorate however you want- it’s your home, after all!

Lower Rate of Interest

The credit-linked subsidy system (CLSS), other incentives for cheap housing, and a low-interest rate on housing financing are all examples of economic changes that facilitate and even benefit young first-time homebuyers. In addition, buying a house when one is at the pinnacle of one’s career helps to control expenditures while simultaneously establishing a foundation of stability and an asset for the future. You should always consult a real estate agent when buying a home.

Final Words

Purchasing a home is a substantial financial commitment. Most renters think that this is something unachievable. Considering all the factors, buying a home makes more financial sense than renting.

However, it is highly recommended that you seek the advice of a real estate professional if you are considering buying a property. Doing so may significantly impact the value of the home, the possible returns, and your overall pleasure with the purchase.

Marcus Roper

Broker Associate / Compass Real Estate
Principal / The Westhorn Group

Marcus began his career as a real estate analyst at Goldman Sachs in Dallas, Texas. His team was responsible for the investment of Goldman’s capital into real estate portfolios.

Marcus has since then established himself as a Realtor® & Broker in the western areas of Austin, specializing in high-end new construction, boutique listings, staging & design, and a seamless client experience.

Marcus enjoys viewing and playing live music, exercising on Town Lake, and playing golf at Barton Creek & Austin County Clubs.