Truths About Renting
Millions of consumers who have either owned a home before or have never owned a home are very - too -familiar with wasting money renting. Listed are a few renting truths that could make you reconsider whether it is ultimately worth it.
It may be a legal right to occupy a property, but it does not include being able to make changes to your home. Most rental agreements include stipulations that you cannot make arbitrary improvements to the property without first consulting with and getting approval from the landlord. Which comes down to, you are not allowed to change the locks, make repairs, paint, or change anything without approval of the landlord. If you do change something before aquiring appoval it could be in violation of your rental agreement, prompting a warning from your landlord — or even, an eviction. Renting is unlike homeownership, becuase you will always have to go through your landlord for changes or improvements to the property, including minor repairs, assuming the landlord wants to make those improvements or changes. Owning a home allows you so much more freedom
Your Rent Payment Is not like a fixed-rate mortgage
The nice thing about a fixed-rate mortgage is that it stays constant over time, it doesn't rise, doesn't drop, it just remains fixed. Which allows a homebuyer to plan for their budget. Renting on the other hand is not fixed, and is subject to change. Even if you have a lease, it is still fixed for the term of that lease only. Your rent will most likely rise over time as most landlords take advantage of market conditions. Very similar to an adjustable-rate mortgage that adjusts on an annualized basis, your rent payment can change yearly, or even more than once per year, depending on the terms of your rental lease. If you have a month-to-month rental agreement, the landlord can change the rent at any given time.
Rising Rents Equals Less Stability
The unemployment rate is 5.8% right now and the economy, in terms of job growth, is looking hopeful. Job growth paired with low unemployment drives the housing market. As long as this trend continues, the cost of ren in many markets will rise,(if they haven't already) and remain at those higher levels for years to come. With rising rents comes increased competition from other people seeking occupancy. The higher the rent prices, the more money for landlords they will then set and procure higher rents, shutting out affordability for people who cannot afford a higher housing payment with their current household incomes. This can easily force a family to stay put and be made to adhere and accept the constraints and/or the conditions set by their current rental agreement. However, buying a home offers future stability in your housing situation.
Your Rent Payment Does Not Build You Equity
Landlords thought process is that they have more discretion over their expenses if someone else is paying their mortgage. Paying down your mortgage every month helps you build home equity and increase net worth. Making a mortgage payment on an amortized loan is comparable to a bank savings account where you deposit money on a monthly basis with the return. As you make payments on time of principal and interest over time, your mortgage balance decreases, and the difference between what you owe on your home and what your home is worth is a makes more money that you don't have when renting. Instead, your landlord is the one that earns this benefit. As a renter you don't receive the mortgage interest deduction or any deduction for property taxes, which means you are taxed on a larger percentage of your income than you would be as a homeowner.
If you think you can't qualify to buy a house, try again. There are so many available first-time buyer loan programs available with as little as 3% down. Many lenders now offer available second-chance options geared toward helping previous homeowners to repurchase successfully. Whatever your circumstances, if you are stable in your occupation and know you want to settle down, you should definitely see what you could do to qualify or what action steps you would need to o qualify in the future.
If you are in the market for a new house and would like information on homes for sale, or are first time home buyer not working with a Realtor and would like to schedule a consultation with a qualified Oakland County and Macomb County Realtor, please complete the Lang Premier Properties contact form to have a real estate agent contact you.
Lang Premier Properties are Birmingham Realtors specializing in Oakland County Real Estate. Stephanie is an agent with Lang Premier Properties. See what past clients have to say about Stephanie Lang. Lang Premier Properties looks out for your best interests when you purchase a new custom luxury home. We always recommend working with an experienced luxury real estate agent when buying a new luxury estate.