When is Buying a Home Better Than Renting?

November 30th, 2011
Division: Company

Young couple purchased home

When is Buying a Home Better Than Renting?

We have all heard that “It’s better to own a home than to rent.” But is this really true?

Going by the numbers presented by the federal government, you have to say that it does make more sense to buy, even in today’s uncertain real estate climate. On average, a person making $30 – $50,000 dollars (according to the Federal Reserve board) will save nearly $11,000 each year by owning their own home as opposed to renting. Obviously, the more money that you earn – in theory – the more money you are going to save.

According to the government figures, there are two ways you will save by buying a home. One way is the savings you will accrue by paying down a mortgage. Of course, this is all contingent on your debt to income ratio; which is something you need to be wary of. Some home buyers get in over their head, which makes them unable to pay timely and hence defeats the purpose of any savings.

The other way that buying is a better option is through appreciation of the home’s worth. The rise in value as time goes by only makes your home even more of a precious entity. Instead of paying someone else’s mortgage by renting, over time you are building equity with your own property. There are many cases of people who purchased a home 20+ years ago in an undeveloped area, and over time the malls pop up and the roads stretch wider to accommodate a growing population. This brings the value of the home up significantly, making it a real investment that no Wall Street broker could even predict.

The reality of renting is that you will never get ahead of the game unless you are extremely cautious and fiscally steady. You will have to save over a prolonged period of time and then make your move. Ask anyone who has rented for a long time, and they will tell you that it becomes a near impossibility. While it’s not impossible to rent and save money, the question becomes how long you want to give your money to something that will never be yours. Everyone in the housing industry will tell you that the most important thing you need to consider when buying a home is whether you can keep up on your mortgage payments. Falling behind on mortgage payments is a big problem in the country and is one reason for the near collapse of the housing market. It will certainly not get you any further behind and you will become like the rat spinning the wheel that can’t get off.

Because of the economic downturn within the last couple of years, you can now find some gems on the real estate market, like that of Mercedes Homes. Astounding prices make this an attractive time to buy a home. You can also buy a house with a low interest rate bracket. Right now is the perfect time to buy a house instead of renting. But don’t wait too long; because when the economy gets back on its feet, the price for a house will go up. So too, will the interest rates.

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