Another week, another installment of VPP Mythbusters!
This week’s myth touches on the age old decision of renting vs. buying. Individual circumstances vary, and we understand that both options provide unique benefits and challenges for every family.
That being said, our goal is to help those we work with build wealth through real estate, and address any barriers that may stand in the way of achieving your long term success. Here’s the myth:
The Myth: “Renting is always a lesser commitment than buying.”
Let’s start with the obvious. Yes, signing a 30 year mortgage is a longer commitment than a one year lease. But is it always greater commitment when considering your long term future? Let’s look at this through a different perspective.
Time for some rough math: Say you have the option of paying $2,000 per month in rent or in mortgage payments. That’s $24,000 per year that is either going into your landlord’s pocket, or equity for you to leverage and grow your future wealth.
We all know that when it comes to building assets sooner is always better, so consider the ripple effects that having that additional equity can have on your future plans. In this case, the commitment made by not buying can end up being larger than you think.
You may also consider the short term commitment that can come with renting. Often times we find that those renting are paying more in rent than their neighbors are paying for a mortgage, meaning they are paying both in the short and long term.
If you are worried about moving in the future, buying will give you the opportunity to become the landlord instead of the tenant, or we can always sell and odds are you’ll get out ok.
Again, every situation is different, so we recommend having a conversation with your Realtor and lender before commiting to a decision either way. Even if the timing simply isn’t right to buy, you can sleep easy knowing that you’ve explored your options.
More mythbusting to come!
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