Should you rent or buy your Charlotte, North Carolina metro area home? Either way you are paying a mortgage--yours or your landlord's! How often do I hear from someone the following "I don't want to be in debt and owe on a home loan?" More often than many would think. Yet, when you are renting you are, in fact, paying on a home loan (your landlord's), even if the obligation is not in your name!
How Owning A Home, Not Renting Impacts Your Financial Well-Being:
- Rent Increases Are Expected To Continue Through 2015: while economists predict that home price appreciation might slow down to around 2.5% by the end of 2015, rents are expected to increase by about 3.5% this year and they are anticipated to continue increasing into 2016. Check out the graph below showing the huge increases in median asking rent since 1988 with no slowdown expected any time soon.
You Are Paying A Mortgage Whether You Rent Or Buy: as already noted, it's just a question of whether you want to continue to pay your landlord's mortgage and have nothing to show for it at the end, unlike with your own mortgage where you can enjoy tax benefits and equity appreciation over the years.
- If You Rent, You Are Spending Almost 30% Of Your Income On Rent: this is as compared with being a homeowner, where the percentage of your income spent on rent is 17.4% or less. Just think to what other uses you can put that money to build longer-term wealth.
- Currently Buying A Home Is More Affordable Then Renting A Home: the graph below shows that by the third quarter of 2014, buying a home was almost 31% more affordable than renting a home. Interest rates would have to increase to 10.6% for it to become cheaper to rent than to buy. Not only have we not seen rates that high since 1989, the liklihood of them getting to that level in the foreseeable future is virtually nil.
- Homeowners Have More Retirement Assets Than Renters: keep paying your landlord's mortgage, not only will your cost of housing be considerably higher, but you truly will have nothing to show for it at the end of the day because you've built no equity over time.
- Homeowners Have A Networth That Is 30 Times Greater Than That Of Renters: the chart below from as far back as 2012 says it all as to why you should be buying and not renting.
And we haven't even discussed why people prefer to own their own homes instead of renting, all of which have to do with reasons other than purely financial ones. Overlay these reasons on top of the financial reasons and it simply makes no sense to keep renting when you can buy a home.
Source for all graphs/charts: Keeping Current Matters (KCM)
Previous articles on why you should buy, not rent:
- Two More Reasons To Buy And Not To Rent Your Home
- The Best Way To Build Your Wealth In Charlotte, North Carolina
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