It’s typical for renters to be hesitant to take on a mortgage. Some don’t have enough for a down payment, and others are nervous about the commitment. But what many fail to realize, it that unless you have the luxury of living somewhere rent free, you are still paying a mortgage — your landlords. But buying a property for yourself can be viewed as a ‘forced savings’ which allows you to build wealth as you make your monthly payments.
When it comes to mortgages, each monthly payment that you make is a step closer to fully owning your home, valued as home equity. And as the value of your home increases, so does the equity in your home.
Pulsenomics new report predicts that home prices are expected to rise 4.3% by the end of 2019. Rates are expected to rise an average of 3.21% each year over the next 5 years.
The good news
This is fantastic news for those who own homes. Let’s say a home was purchased for $250,000. If rates continue to rise as expected, over the next five years, the owners could see an increase in home equity by about $40,000.
Your home equity should be factored into your home purchase. It can wind up being a big chunk of your family’s net worth. It’s commonly overlooked when people make the decision to rent rather than buy, and could wind up increasing your overall wealth.
So whose mortgage would you rather pay — your landlord’s or yours?