26 Feb Why It Pays to Own, Not Rent
At City Creek Mortgage, it’s our mission to get you the best mortgage rate as you search for your home. Especially for first-time buyers looking to become homeowners, this is a vital consideration.
Why should you want to become a homeowner? There are numerous benefits, from the independence and space you’ll find to the kinds of areas you might be able to live in. But perhaps the biggest benefit, and one many folks often overlook or become confused on, is the financial side – two recent studies helped illustrate the net worth and ROI gap between homeowners and renters. Let’s look at the results, and what they might mean for you.
As of December 2013, the US Census Bureau reports the median net worth of homeowners at $199,557. This is in comparison to the net worth of renting households, which is just $2,208 on average, or nearly 100 times less. In addition, the recovery of the economy during the years in between makes it likely that the gap is even larger today.
Another study from the Federal Reserve effectively confirmed these findings, noting that the gap in homeowner and renter net wealth rose from a difference of $182,000 to over $220,000 during the period between 2010 and 2013.
How to Interpret Them
It’s important to remember that in many situations, this disparity was due to more than just a housing situation. Many homeowners are in that situation because they’re more well-off to begin with, allowing them to invest in a home.
However, this is something of a self-fulfilling prophecy in some ways. Homeowners enter into debt just like renters, but they do so in an investment – renters do not. Since home prices continue to rise faster than interest on a basic home loan, homeowners are building equity over time and can often make a significant profit on the back end. This is without even considering all the tax advantages that come into play, none of which are available to renters.
To learn more about why you should favor homeownership over renting if you have the choice, or to learn about any of our other mortgage loan services, speak to the pros at City Creek Mortgage today.