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Victoria Cottle

Rent or Buy…you are Paying Someone’s Mortgage

Rent or are Paying Someone's Mortgage

You maybe of the mind that you don’t want to jump into the mortgage game but unless you live with mom and dad and pay no rent, you are paying someone’s mortgage. Why not make it your own?

A premier source for small business, Entrepreneur Magazine, put out an article called “12 Practical Steps to Getting Rich.” In this article, they state that renting on a temporary basis isn’t the end all, but if you are serious about your finances you need to own your own home. You won’t get rich fast but by renting you are making someone else rich.

Another plus is that with a 30-year mortgage you have the stability of knowing what your monthly payment will be for the next 30 years and can more easily fit it into your budget. Rents have a tendency to rise to rise upon each renewal period, so if you are renting for one year, expect the rent to rise at the end of the year. Most landlords raise their rental rates based on the interest rates or listing prices of homes in their areas.

Being a homeowner, the mortgage company forces you to build equity in your home that you can use later in your lifetime. As a renter, the landlord builds the equity and you get nothing.

Interest rates are still historically low even though the Fed has raised short term rates by .50 already this year. Short term rate increased does not affect 30-year mortgage rates directly. Freddie Mac reported these average mortgage rates as of March 23rd 2017.

  • 30-yr FRM – 4.35% with 0.5 Fees/Points
  • 15-yr FRM- 3.44% with 0.5 Fees/Points
  • 5/1-yar ARM – 3.23% with 0.4 Fees/Points

Freddie Mac also reported on their quarterly house price index that nationally in December 2016, the annual house price changed by +6.5%.

So our takeaway for today is think hard about buying a home as opposed to renting. Home prices will only increase and mortgage rates along with it. A small percentage point can mean an extra $200.00 or more out of your budget each month whether you rent or own.

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And remember if you, a friend or family member need assistance with selling or buying a home I can help. Referrals and people needing relocation assistance are welcome! Search Single Family homes in Greenville. Search Condos and Townhomes in Greenville.

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