There are many benefits to homeownership. One of the top benefits is being able to protect yourself from rising rents by locking in your housing cost for the life of your mortgage.
Donât Become Trapped
Jonathan Smoke, Chief Economist at realtor.com, reported on what he calls a âRental Affordability Crisis.â He warns that,
âLow rental vacancies and a lack of new rental construction are pushing up rents, and we expect that theyâll outpace home price appreciation in the year ahead.â
In the Joint Center for Housing Studies at Harvard University's 2016 State of the Nationâs Housing Report, they revealed that âThe number of cost-burdened households rose to 21.3 million. Even more troubling, the number with severe burdens (paying more than 50% of income for housing) jumped to a record 11.4 million.â These households struggle to save for a rainy day and pay other bills, such as food and healthcare.
Itâs Cheaper to Buy Than Rent
In Smokeâs article, he went on to say,
âHousing is central to the health and well-being of our country and our local communities. In addition, this (rental affordability) crisis threatens the future value of owned housing, as the burdensome level of rents will trap more aspiring owners into a vicious financial cycle in which they cannot save and build a solid credit record to eventually buy a home.â âWhile more than 85% of markets have burdensome rents today, itâs perplexing that in more than 75% of the counties across the country, it is actually cheaper to buy than rent a home. So why arenât those unhappy renters choosing to buy?â
Know Your Options
Perhaps you have already saved enough to buy your first home. HousingWire reported that analysts at Nomura believe:
"Itâs not that Millennials and other potential homebuyers arenât qualified in terms of their credit scores or in how much they have saved for their down payment. Itâs that they think theyâre not qualified or they think that they donât have a big enough down payment.â (emphasis added)
Many first-time homebuyers who believe that they need a large down payment may be holding themselves back from their dream home. As we have reported before, in many areas of the country, a first-time home buyer can save for a 3% down payment in less than two years. You may have already saved enough!
Donât get caught in the trap so many renters are currently in. If you are ready and willing to buy a home, find out if you are able. Have a professional help you determine if you are eligible for a mortgage.