Why You Shouldn’t Renew Your Lease
Now really is the best time to leave your lease behind. Nearly every factor in purchasing a home is in the favor of first-time homebuyers. However, many potential homeowners are staying with their leases and continuing to pay the majority of their income on higher rents.
If you paid a mortgage payment instead of rent, every payment would be going toward “forced savings.” Essentially, “the principal portion of your mortgage payment helps build your net worth through building the equity in your home,” states the Harvard University’s Joint Center for Housing Studies. If you keep renting, you’ll only be paying your landlord’s mortgage adding to his or her equity and not your own.
According to Mortgage Bankers Association, leases renewed in August included a 5.4 percent average increase in monthly rent. That’s the “largest rent increase for lease renewals in nearly 10 years.” Renters in Seattle are all too familiar with increases like these. Even with these figures, every region in the U.S. still logged lease-retention rates above 50 percent.
The Beracha, Hardin & Johnson Buy vs. Rent Index results show the majority of major markets in the U.S. favor buying a home to be more effective and beneficial to producing greater wealth. With rents continuing their steady increase, you’ll want to lock in your housing cost with a mortgage payment now and leave the rent payment behind according to Keeping Current Matters.
What does this mean for you?
Rents are rising, mortgage rates are ideal. The facts are all pointing to the same conclusion…
Don’t renew your lease!
Start using your monthly housing cost to build your equity, not your landlord’s.