If you’ve been paying rent for a while now, you may be at the point where you’re weighing the pros and cons of buying vs. renting. Renting trends aren’t looking good for Americans. Rents have skyrocketed in most major cities across the nation, and with demand for apartments and rental units continuing to rise, it’s likely those trends aren’t going to stop anytime soon.
As surprising as it may be, this often makes homeownership a more affordable option—both monthly and over the long term—for many renters across the nation.
Buying vs. Renting: How Buying Can Be More Affordable
There are a few ways homeownership can save you over renting, both short-term and across time. The first is the most obvious: your mortgage payment may very well be less than what monthly rent would cost you. If you’re in a big city (or a community near one), chances are your rents have steadily increased in recent years.
In Boston, for example, rents have now exceeded $3,200 a month. The average mortgage in the Boston metro? It’s only $2,165. That’s a savings of nearly $1K a month and $12,000 a year. Other big cities are seeing similar jumps, making buying an even more viable option for their residents.
Monthly costs aside, homeownership also saves you in the long-term, too. When renting, you’re not gaining equity in your property, and those monthly rents you pay will never come back to you in the end. With monthly mortgage payments, your cash puts you one step closer to owning that home outright. Then, once you decide to sell the house down the line, you could get all all your money back—and hopefully more.
Think of a mortgage like an investment in your future. There is some risk, but homeownership can provide you with equity 10, 20, or even 30 years down the road, when you need it most.
Don’t Get Caught Paying More
According to recent data, buying a home is more affordable than renting in over half of the nation’s counties. Are you located in one of them? If so, it’s time to get out of the rent race and start saving money.
To optimize your chances of saving big, work on improving your credit so you qualify for the lowest mortgage rates possible. You should also work toward saving a decent down payment, as this will help keep your monthly payments low—especially if you choose a long-term, 30-year loan.