How Renting Makes Your Landlord Richer
Some people have not purchased homes because they are uncomfortable taking on the long-term obligation of a mortgage. Everyone should realize, however, that unless you are living with your parents rent-free, you are paying a mortgage – either yours or your landlord’s. Entrepreneur Magazine, explains this in their article, “12 Practical Steps to Getting Rich”:
“While renting on a temporary basis isn’t terrible, you should most certainly own the roof over your head if you’re serious about your finances. It won’t make you rich overnight, but by renting, you’re paying someone else’s mortgage. In effect, you’re making someone else rich.”
With home prices rising, many renters are concerned about their house-buying power. Mark Fleming, Chief Economist at First American, explained:
“Over the last three years, renter house-buying power has increased fast enough to keep pace with house price appreciation, so the share of homes that a renter can afford to buy has remained the same since 2015. That means, no change in home available.
Although mortgage rates are expected to rise, they are still low by historic standards, and real household incomes are the highest they have ever been. Assuming this trend continues, our measure of affordability, which takes into account income, interest rates, and house prices, indicates that homeownership is still within reach for renters.
You have heard it before and it is still true that, your mortgage payment is a form of ‘forced savings’ which allows you to build equity in your home that you can tap into later in life. As a renter, you guarantee the landlord is the person building that equity.
Interest rates are still at historic lows, making it one of the best times to secure a mortgage and make a move into your dream home. Freddie Mac’s latest report shows that interest rates across the country were at 4.51% last week. If you are looking for a primary residence for the first time, now may be the time to buy.
Visit us at hfamiami.com/homebuyers to learn about our first-time home buyers mortgage, low interest rates and up to $15,000 in down payment assistance program.
Note, information in this blog derived from Keeping Current Matters.