Wednesday, February 5, 2014
There are a number of reasons why buying is more advantageous than renting in Charleston and the rest of the Tri County area. Here are the best 5 reasons owning a home is better than renting in this market.
1. Rents have skyrocketed over the last few years, making it less affordable to rent. Thatís likely to continue as the number of available rental properties decline. In addition, companies like Boeing and Benefitfocus continue to expand creating more demand for housing which should drive rents and home prices higher.
From January to October of last year, the rent for a one bedroom apartment jumped 12.5%. The increase was more than 16 percent for a two bedroom.
2. Owning a home has historically been the best way to increase ones net worth. Itís an investment in your future. When you rent, the rent is gone every month. When you own a home, a portion of each payment is paying down the mortgage and building equity in your home. Some look at this as a forced savings account. Either way you see it, your net worth is growing. According to the Federal Reserve the median net worth is $174,500 for someone who owns a home versus only $5100 for someone who doesnít. Thatís a 34:1 difference and it speaks volumes about the power of being a homeowner.
Source: The Federal Reserve Boardís Survey of Consumer Finances for 2010
3. Low interest rates. Todayís rates are near the lowest in history so buying is still very cheap. If youíre going buy, now is the time while home prices and the borrowing costs are still low.
At the end of 2013 the Federal Reserve announced that it will start dialing down its bond buying program in the first quarter of 2014, also known as QE. This program is the reason rates have been so low. By cutting back and eventually phasing it out completely, interest rates will move higher. Since The Fed hinted they were going to cut back in mid 2013, interest rates have increased by 1% . How high do you think they will go once they actually start cutting back? No one knows for sure however all the experts agree rates will move higher and it will be more expensive to buy a home as a result.
4. Owning gets cheaper every year. How you say? When you have a fixed rate mortgage the payment doesnít change. As you get older youíre likely to make more money but the mortgage payment will always be the same on a fixed payment. So in 20 years a $1200 mortgage payment should be a much smaller percentage of your income. On the other hand your rent will increase as the years go buy.
5. Pride of ownership. Living in a community dominated by owners tends to be nicer. It tends to have better schools, and overall be a better community to live in because owners care more about the property and surrounding areas. They have more invested so they care more about the community than a renter.
Eddie OíNeill is a mortgage expert with Coastlend Mortgage based in Charleston, SC. He has been a licensed professional since 2004, license # NMLS 251457, and has closed more than 750 home loans in his career. His attention to detail, commitment to quality and competitive lending has earned him the respect and praise from clients and colleagues alike. Please direct any questions to firstname.lastname@example.org