Homeownership Trumps Renting, So Get Out and Invest in a Home!
Many potential homeowners have opted to put off buying a home in favor of renting, believing the economic environment is too unstable, making renting seem more financially efficient. But a new study by Trulia.com suggests that in at least 74 percent of American cities, consumers may be better off buying a house rather than renting one. The findings are a welcome bit of good news for prospective homeowners, although for the landlords of these rental houses, the news paints a less-rosy financial prospect.
Trulia.com outlined several reasons for its findings. First, since housing prices peaked in 2006, prices have adjusted to make real estate much more affordable. Plus, interest rates remain at historic lows. For example, monthly mortgage payments for an LGI Homes property can start at less than $700.
House Flipping is a Thing of the Past
Homeowners, though, have to be aware that the days of buying a house and selling it a year or two later for significant profit are gone, at least for the foreseeable future. To see a profit, experts say owners need to keep the property for at least seven years.
Also, prospective buyers need to include all the associated costs of homeownership—including mortgage, property taxes, insurance, utilities, and landscaping costs—when determining how much they can spend on a house.
Even though it is possible to get home loans with just three and a half percent down, most experts highly recommend waiting to buy a home until you have enough to make a twenty percent down payment, plus enough additional savings to cover eight months of expenses.
By approaching homeownership smartly and responsibly, you can start building equity instead of paying rent.