Most Americans aspire to own their home, and as mortgage rates are at near-record lows, buying a house becomes more appealing and accessible for more people.
Many calculators exist that can help you weigh the pros and cons of homeownership, such as those offered by Trulia, the New York Times’ The Upshot and Freddie Mac.
What are the benefits of owning vs. renting?
People who have rented for much or most of their lives often believe buying a house is beyond their reach. However, with lower mortgage rates and smaller down payments, that may no longer be true. Here are some considerations:
- Wealth building: Growing your net worth through increasing equity in a home is how a majority of Americans build wealth. A recent study concluded the average homeowner’s net worth was $231,420, while a renter’s was $5,200.
- No more rent payments: If you are a renter, your hard-earned income goes to paying down someone else’s mortgage, and your rent is likely to increase every year due to inflation alone. However, your interest rate is fixed when you take out a mortgage, and as inflation goes up, your home effectively becomes cheaper the longer you stay there.
- Reduced down payments: While a 20% down payment was once the standard for buying a home, today’s average is about 5%. You will likely have to pay private mortgage insurance (PMI) until your equity reaches 20%, but your monthly payment may still be less than rent. Also, first-time homebuyers often qualify for even lower down payments and other incentives.
- Sense of security: Finally, many people who buy a house after years of renting say the experience gives them a massive sense of accomplishment and security, knowing that they’re living in their own space and growing their net worth instead of continuing to help someone else get richer.
Protect your investment
Buying a home is the single-biggest purchase most of us will ever make. While your local real estate agent may do a majority of the legwork, the services of an experienced real estate attorney here in Illinois can be crucial for navigating many complex areas involved in the transaction. Your attorney can help you negotiate a fair price and protect your interests in all phases of the process up to and including closing.