Is it better to rent a home or to buy one? To help me answer this question, I’m joined by mortgage expert Karen Johnson from Waterstone Mortgage.
According to Karen, renting a home means that you can anticipate about a 3% rent increase per year. That means in the span of seven years, you could go from paying $1,600 a month to $1,900. Renters can’t lock in a fixed payment over time.
On the other hand, when you’re a homeowner, you can lock in your payment for the principal and interest, meaning that you can consistently pay the same amount each month. Seven years later, when the value of your home has increased and you have built up equity, you’ll still have that same principal and interest payment.
Additionally, homeowners can anticipate a 3% increase in value over a year’s time; a home priced at $225,000 may end up being worth around $275,000 in seven years.
If you’re looking for a solid investment, homeownership is definitely the way to go. The only situation in which it’s better to rent than to buy is when you can’t qualify for a home loan.
For any questions you may have about buying a home, don’t hesitate to reach out to us. We’d be glad to help you.