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Renting or Buying… Either Way You’re Paying a Mortgage

Renting or Buying… Either Way You’re Paying a Mortgage

There are some people who have not purchased homes because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize that, unless you are living with your parents rent-free, you are paying a mortgage – either yours or your landlord’s.

As Entrepreneur Magazine, a premier source for small business, explained this month in their article, “12 Practical Steps to Getting Rich”:

While renting on a temporary basis isn’t terrible, you should most certainly own the roof over your head if you’re serious about your finances. It won’t make you rich overnight, but by renting, you’re paying someone else’s mortgage. In effect, you’re making someone else rich.”

Christina Boyle, Senior Vice President and head of the Single-Family Sales & Relationship Management organization at Freddie Mac, explains another benefit of securing a mortgage vs. paying rent:

“With a 30-year fixed rate mortgage, you’ll have the certainty & stability of knowing what your mortgage payment will be for the next 30 years – unlike rents which will continue to rise over the next three decades.”

As an owner, your mortgage payment is a form of ‘forced savings’ which allows you to build equity in your home that you can tap into later in life. As a renter, you guarantee the landlord is the person with that equity.

Interest rates are still at historic lows, making it one of the best times to secure a mortgage and make a move into your dream home. Freddie Mac’s latest report shows that rates across the country were at 4.23% last week.

Bottom Line

Whether you are looking for a primary residence for the first time or are considering a vacation home on the shore, now may be the time to buy.


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2 replies
  1. Troy Erickson
    Troy Erickson says:

    Why not pay yourself instead of a landlord? If you are going to live somewhere where you are going to be paying for the shelter over your head, why not pay yourself? As a home owner, you are paying a mortgage that will go towards eventually paying off what you owe. You also should gain appreciation on the value of your home over the years, and receive certain tax benefits. As a renter, the amount of rent you pay is going directly to the landlord, who is using it to pay off their mortgage.

    Reply
  2. Cindy
    Cindy says:

    That’s all fine and good, and I totally agree but when companies make it next to impossible to get a loan, you don’t have many options. They expect you to have damn near perfect credit (I’m putting myself into MORE debt trying to rebuild my credit than anything!!) and if you don’t have a high down payment, you’re S.O.L. For example, I KNOW that I can afford a mortgage payment and I know how much I can afford; however, I don’t have thousands of dollars sitting in the bank to drop at one time. So even though I have a decent income and can afford to pay something on a monthly basis, I don’t have $5,000+ to use at once as a down payment so now I don’t qualify. And yes, there are programs out there to help, but again, with a lower credit score, you don’t qualify! So these article try to sell you things that you can’t qualify for. I have been working on this for over 2 years now and every time I think I’m good, SOMETHING comes up that I have to fix.

    Reply

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