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Renting vs. Home Ownership: Why Becoming a First Time Homebuyer is Cheaper Than Renting

Renting vs. Home Ownership: Why Becoming a First Time Homebuyer is Cheaper Than Renting

Think renting is cheaper? Think again.

We’ve previously written about all of the “other” benefits of owning vs. renting, but one of the biggest selling points of becoming a first time homebuyer is that it can actually be cheaper than renting — even as you pay off your principle and build equity. In fact, according to Forbes magazine, owning a home is now roughly 38% cheaper than renting.

If you haven’t yet, you should be considering making the transition from renter to first time homebuyer for the following reasons:

Rents are always up

Costs of renting have gone up year over year for quite some time, far faster than mortgage rates. In fact, rents increase even when the economy suffers. Though mortgage rates are currently rising faster than rents, rates have a lot of ground to cover, and are more responsive to changes in the economy.

At this point, mortgage rates would have to rise to more than 10.6% to surpass rents nationally and make housing less affordable than renting. Rates have not been that high since the late 1980s.

There are tax breaks and other resources for homeowners

Uncle Sam gives plenty of first time homebuyer help (and second and third time for that matter). There are tax deductions for mortgage interest on both your primary home, and a secondary home if you have one. If you think your property taxes eat up some of the difference between owning and renting, think again: you can deduct those too. Interest on home equity loans can also be deducted, as can any points you (or the seller) purchased.

There are also many federal and local programs that offer first time homebuyer help for qualified individuals, increasing the affordability of renting. Renters, on the other hand, have no such deductions, though their landlords get plenty.

You have something to borrow against

Homeowners have greater financial flexibility in the long term as their monthly payments purchase ownership, ownership that can be borrowed against with a home equity loan after a certain threshold is met. This can come in handy when a homeowner runs into unexpected expenses. Renters are forced to rely on savings or more costly loan types.

At Blue Water Mortgage, we have the first time homebuyer help you need to break out of the renters’ game and get into your first home. Our team of experts will guide and educate you through the process so you can reap the benefits of home ownership. Contact us today for more information.

Roger Odoardi

Roger is an owner and licensed Loan Officer at Blue Water Mortgage. He graduated from the University of New Hampshire’s Whittemore School of Business and has been a leader in the mortgage industry for over 20 years. Roger has personally originated over 2500 residential loans and is considered to be in the top 1% of NH Loan Officers by leading national lender United Wholesale Mortgage.

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