High mortgage rates are here to stay. But is it better to own than rent? (2024)

To buy a house or rent, that is the question?

The market has made it challenging forhome buyers, who must balance little inventory and a lot of competition. And to make matters worse, rising interest rates are here to stay.While home mortgage interest rates have increased to the high 4% range, this would be the time to really ask yourself what is the better option... buy or rent?I get it, it's a tough market right now, it may be nerve-wracking to deal with putting an offer on that home you have dreamt about and very likely deal withbuyer’sfatigue and end up paying more a month because of the current rates. However, investing in real estate may be more beneficial than you know in the long run.

You can sayYahoo! News explains it well,

Housing — mortgage or rent — makes up a third of most household budgets. Even with maintenance costs and homeowners insurance premium increases, homeownership is still cheaper — because they make up just a quarter of housing-related expenses, according to Fleming. The rest is a fixed mortgage payment. “Rent is going up faster than inflation in certain areas,” Fleming said. “The best hedge against inflation is homeownership because your housing cost stays the same.”

Yahoo! Money also adds to that even though higher mortgage rates are here to stay. It’sstill better to own than rent if you can afford the down payment.

Yes, we are at this moment facing normal than usual high interest rates, higher than we have seen in a long time. In fact, it’s been two years of historically low interest rates. But as we see in 2022, times are changing, and home buyers need to face another challenge besides a lot of competition. but also, low inventory. And although it may be spring, and spring is known for more homes on the market, we are still dealing with a housing availability crisis.

However, one benefit of high interest rates, is you are not dealing with as much competition compared to the last two years. More home buyers currently are less qualified than they were this time last year. And homes are having longer days on the market than before.

Invest in real estate? Or keep it in the bank?

Investing in real estate may be more beneficial than you know in the long run.Yahoo! Financemakes a good point

“You need to look at money as a tool and use money to build wealth.” To that end, money you put into a bank does not build you any wealth. An average interest-earning bank account will pay between 0.01% and 0.50% interest, which is less than the current rate of inflation, which was 6% in 2021, he said.

With that said, I recall a time I blogged about how investing in real estate can benefit you by building appreciation over time. In fact, one of the best waysto build equityis having a larger down paymentwhen you purchase your home. This, in return, puts more equity directly into your home.

In a blog I wrote in late February 2022,Owning or Renting? What Is More Affordable in Real Estate?I mention some of differencesbetween renting a house vs. buying. Sure there are fewer (if any) maintenance costs when renting, also things like having less stress about the home because it's not yours and of course there is the freedom to move or downsize when necessary once your lease is up.Here is an image of some differences

In my blog, I go on to mention that in an article I read, keeping up with current matters, they address that,

when you rent, that rising cost benefits your landlord’s investment strategy, but it doesn’t deliver any sort of return for you.In contrast, when you buy a home, your monthly mortgage payment serves as a form of forced savings. Over time, as you pay down your loan and as home values rise, you’re building equity(and by extension, your own net worth). Not to mention, you’ll lock in your mortgage payment for the duration of your loan (typically 15 to 30 years) and give yourself a stable and reliable monthly payment.

It is just a matter of what is best for you! One of the small benefits of renting that a lot of people don't consider is deciding on a location. Sometimes, a renter will choose to only rent with a one-year lease to figure out if they like the location they are renting at. Things like the entertainment around them, how convenient is the commute to work, friends, appointments, etc., are important. In return, once the lease is up, they feel more confident buying in the location they were renting or considering a different location. Most importantly,if you’re planning on weighing your options between renting and buying, it’s important to look at the full picture. What is the best decision for you and/or your family?

It really is important that you work with someone that helps set you up for success when or if you decide that you want to buy. Sometimes, the best thing that someone can do is investigate. Going to a mortgage loan officer and finding out what you are approved for and how to get your credit score to be able to buy. Talk to areal estate agent, ask questions about locations, find out how buying process goes, and send them a wish list of what you would like to buy and see if it's realistic in your price range. Things like makingahomeownershiplist like

• Save for your Down payment
• Work on your credit
• Work with a real estate professional
• Get pre-pproved

Are You Ready For Home Ownership?

Ready? Let's get started,fill out the form and let’s get the process started. Remember, not only is your homeyour greatest investment, buthome is the nicest word there is