As the housing bubble burst during the Great Recession, millions of homeowners moved out of homes and into rental properties. As demand for rental housing began to skyrocket, so did the cost of renting. The country’s economic situation has improved greatly since 2008, but even as the economy recovers rent prices have remained high. In fact, the Out of Reach 2015 study by the National Low Income Housing Coalition indicates that there is a shortage of reasonably priced rental housing and rapidly rising rents have outpaced wages.
“While renting provides certain benefits, the cost of rent has risen so dramatically that many people are priced out of enjoying those benefits,” said Eric Hamilton, President of Vanderbilt Mortgage and Finance, Inc. “One thing people may not realise is that sometimes owning your own home can be less expensive than renting.”
There are several reasons why one might prefer to rent. Renting offers flexibility for moving, since most people typically sign leases with terms of one year. There is typically less maintenance involved, since maintenance is usually performed by the landlord. However, owning a home also has several great benefits, such as:
Ownership, when renting, 100% of the rent payment goes straight to the landlord meaning you are paying the equivalent of 100% interest to the landlord. A typical mortgage payment consists of both interest and principal payments with the principal applied toward reducing the loan balance. Eventually those mortgage payments will result in full ownership of a home unlike rental payments which are not applied toward the purchase of a home.
Flexibility, whether it’s owning a pet, making renovations or even something as simple as painting the walls, a lot of lease agreements restrict what a renter can do with and in his or her rented living space. Homeowners, on the other hand, have the freedom to change aspects of their home whenever they want.
Outdoor spaces, gardens, grills, hammocks, outside pets, a tire swing in the backyard. These are all things that may not be allowed when renting. Homeowners have much more freedom when it comes to customising their outdoor living spaces to suit their family’s needs.
“Homeownership provides lots of benefits in several different areas, both on emotional and financial levels,” said Hamilton. “Between the high cost of rent and restrictive lease agreements, it makes a lot of sense to own your own home in today’s housing climate.”