Thursday, July 21, 2022 / by Margie Wright
When you rent...
You face rising rental costs. Your monthly payment generally goes up each time you sign or renew a lease. You may start out with a certain monthly price and have it for a while, but then all of a sudden, the price has increased. Nothing else has changed about where you're living while renting. Simply, the price rises and you can be caught in a situation where you can't easily afford it anymore.
Further, you don't earn any financial benefits from renting. Because of rising rent costs, that puts a pinch on your wallet. You don't get a return on your investment at all. Thus, it makes it harder on your to change apartments or try to buy a home since you have less money to work with.
It also limits your ability to save. As rents rice, it can be harder to save for a down payment and buy a home in the future. With rising prices, you have to change your budgeting. You have to figure out now what you can afford while also not being able to put more back into your savings.
When you buy...
You don't have to worry about a changing monthly payment. You have stable housing costs. Your monthly payment is locked in for the length of your loan (usually 15-30 years). Once that's locked in, you don't have to worry about that price changing. You also don't have to worry about not being able to renew a lease.
Plus, you'll own a tangible asset. The longer you have your home, and the more improvements you make on it, the more your home value grows. Any home price appreciation helps grow the value of your home. Down the line, when you want to upgrade or move or your situation changes, you can get more back on your home.
Finally, you can grow your net worth. Your payments and price appreciation build equity and your net worth over time. You'll be able to save back, budget more easily, and know that you you can make a good amount back if you decide to sell in the future. If you pass on your home to someone else, you'll be able to rest easy knowing that they have a home with lots of value and love.