Owning Instead of Renting to Avoid High Costs
At Cliffco Mortgage Bankers, we understand that home ownership is a goal for most Americans, and with good reason. The financial benefits can be significant. Research by ApartmentList.com indicates that there are sizable financial costs associated with renting your home instead of owning it, such as high rents and a missed opportunity to take advantage of low mortgage rates.
But that’s not all.
A study published by the Joint Center of Housing Studies at Harvard University supported that research by uncovering five major financial benefits of homeownership:
- Housing is typically the one leveraged investment available
- You’re paying for housing whether you own or rent
- Owning is usually a form of “forced savings”
- There are substantial tax benefits to owning
- Owning is a hedge against inflation
The Federal Reserve conducts a Survey of Consumer Finances every three years. The most recent survey (which collected data from 2010-2012) showed that homeowners have a net worth that is 45 times greater than that of a renter. This makes sense when you consider that the average home currently appreciates at a rate of 3.5% per year.
It’s true that homeownership comes with the expenses of repair and maintenance. However, landlords generally roll maintenance expenses into their monthly rent bills, so renters should be aware that they aren’t truly avoiding those costs.
So while renting can be a good option temporarily, experts agree that those with the financial means are economically better off owning their home.