There are times that buyers hold back from purchasing a home, because they don’t want the obligation of paying a mortgage. Keep in mind, though, that unless you are living with someone else free, you are paying a mortgage. You are either paying on the principle of your own mortgage or your landlord’s mortgage.
Your Equity or Their Equity
Each payment you make for living in a rental is divided into principle and interest. Equity is the difference between how much you own on your home and its value. If property value increases to a point that the home is worth more and the equity increases, a homeowner can sell the home and the equity would be what they walk away with. Again, if you are renting, you are paying into your landlord’s equity.
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Monthly Rental Costs
With a rental, there is always the chance that as the landlord’s costs for the home go up, your rent will increase. However, when you own the home, a 30 year fixed rate mortgage will stay the same for the entire course of the loan.
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Therefore, if your payment is $1,100 month, your payment will remain at $1,100 a month for 30 years. If you rent a home, you have no guarantee that your rent will stay the same. In fact, it will likely increase.
The truth is that we all know that we need a place to live. Whether it’s ours or our landlords, we pay the mortgage. Either we or our landlords will benefit from the payments in terms of equity. While rental payments may increase, with the right loan, your mortgage payments will remain the same.
If you’ve given any thoughts lately to purchasing a home, contact us. We can sit down and realistically examine your personal situation. You may be surprised!
