Be careful ... Do not fall into the rent trap!
There are many benefits of owning a home. One of the main ones is the ability to protect yourself from the increase in rents and secure your housing costs for the life of your mortgage.
Do not get caught
Jonathan Smoke, Principal Economist at Realtor.com, reported on what he calls "The Rental Affordability Crisis." He warns that:
"Limited rental vacancies and the lack of construction of new rentals are increasing rents, and we expect them to exceed the price appreciation of homes next year."
In the 2016 State of the Nation Report on Housing from the Joint Center for Housing Studies at Harvard University, they revealed that "The number of households burdened by the cost rose to 21.3 million. Even more worrisome, the number with heavy loads (paying more than 50% of housing income) increased to a record 11.4 million. " These households struggle to save for bad days and pay other bills: like food and medical care.
It's cheaper to buy than to rent
In Smoke's article, he said:
"Housing is fundamental to the health and well-being of our country and our local communities. In addition, this crisis (rental affordability) threatens the future value of owning a home. As the burdensome level of rent will trap more aspiring homeowners in a vicious financial cycle in which they can not save and create a solid credit history to finally buy a home. "
"While more than 85% of the markets have onerous rents today, it is disconcerting that in more than 75% of the counties across the country, it is actually cheaper to buy than to rent a house. So why are not these unhappy tenants choosing to buy? "
Know your options
Maybe you have already saved enough to buy your first home. HousingWire reported that Nomura analysts believe that:
"It's not that millennials and other potential buyers do not qualify in terms of the credit score or how much they have saved for their initial fee.
It's that they think they do not qualify or they think they do not have enough for the initial fee. " (Emphasis added)
Many first-time buyers who believe they need a large down payment may be holding back from acquiring the home of their dreams. As previously reported, in many areas of the country, first-time buyers can save up to an initial 3% down payment in less than two years. You may have saved enough!
Do not fall into the trap in which so many tenants are currently. If you are ready and willing to buy a house, find out if you are able to do so. Have a professional help you determine if you are eligible to obtain a mortgage!