Our honest advice as to why buying may be better than renting in 2021
Buying a home is a big decision that comes with what is probably the biggest financial commitment you'll make in your life. This can be very intimidating and might make you wonder if it's truly worth it. In some situations renting is the better option, but many people who think they should rent don't realize that buying may actually be the better option for them! In this post we'll provide our top 6 reasons to buy instead of rent in 2021.
You work hard for your money. Whether you work from home or commute to work every day, we all know that we could all always use some extra cash. If that’s the case, why are we willing to throw away money at rent every month? When you pay rent to a landlord, you earn nothing but the right to live in that space. Essentially, your money is buying you a service and not a property! The $1500 you pay every month leave you with nothing gained at the end of the month. When you pay that same money towards a mortgage, you are slowly but surely gaining ownership, or equity, of the property that you’re paying for. Think about it. $1500 per month is equal to $18,000 per year. Wouldn’t it be great if that $18,000 provided you with a place to live while also slowly giving you ownership of it? That sounds like a pretty good reason to buy instead of rent, doesn’t it?
2. 2. Property Value Appreciation
We just talked about equity and how you might as well make your rent money go towards something that you eventually own. Another benefit of ownership is that you are entitled to whatever value growth the property experiences! In a place like Myrtle Beach, South Carolina for example, property values have gone up by over 15% in the last year according to Zillow. If you own your home instead of renting it, your property investment can grow substantially over time. You may be wondering why that matters, considering that you’re newly buying the property, and therefore you don’t plan on selling your new home any time soon! While that may be true, owning that increase in value is great for your credit, affecting any future loans you take out. Additionally, you never know where life will take you, and if for some reason you need money in a pinch, you can sell your house and use any gains in the property value. The potential thousands of dollars you can gain over time just by owning your property are enough to put this way up on the list of reasons to buy instead of rent in 2021.
3. 3. Tax Breaks
Many people don’t know about this one, but being a homeowner comes with many different tax perks. For example, in these pandemic years where everyone is working from home, did you know that you may be entitled to a tax credit if you use part of your home as your dedicated workspace? This is only one example. Many other facets of home ownership – like insurance and property taxes, for example – can be written off at tax time. This can save you hundreds to thousands of dollars every year! As a renter you are entitled to basically none of that, making this a clear reason to buy instead of rent in 2021.
4. 4. Mortgage Interest Rates
The first three reasons on this list are true in any year. The fourth reason to buy instead of rent in 2021 is actually specific to 2021, and that is the comparatively low mortgage rates on the market right now. The current average mortgage interest rate in 2021 is lower than the average mortgage interest rates of recent years. Why is this important? A mortgage is probably the biggest contract and largest debt you’ll ever take on in your life. Mortgages tend to be decades long commitments. When you sign a mortgage, your interest rate is fixed, regardless of what happens in the market. This means that regardless of inflation rates, your mortgage payment will not change over time.
5. 5. Stability
This reason to buy instead of rent has a lot to do with the previous one. When you sign a lease, you are typically committing to 12 months of payments. In terms of flexibility, this is great! It means that if something happens and you need to move, you’re off the hook after the end of the year. However, if you’re looking to stay in the same place for a while, annual leases carry one huge downside; your rent can increase every year at the landlord’s discretion. Landlords need to keep up with inflation, and it only makes sense that what you pay should go up in lockstep with inflation every year. When you buy, however, this isn’t the case. When I said before that your payment never changes, I mean it literally never changes. If you commit to $1500 per month over the next 30 years today, you’ll still be paying $1500 per month 30 years from now. While the idea of a 30 year financial commitment may be scary, I think I can make it look a little bit better for you. Let’s pretend that 30 years ago – in 1991 – you signed a mortgage for $1500 per month. That means that this year, in your final year of payments, you are still paying $1500 per months. The difference? With inflation, $1500 in 1991 is worth over $3000 now, meaning that you are paying half the value now compared to what you signed up for. That’s a pretty good deal!
6. 6. Control
Last but not least, control is the final reason to buy instead of rent in 2021. “No nail holes in the wall.” “Don’t paint anything.” “Oh, the shower drain is clogged? I’ll have someone come in a few days.” Do any of those lines sound familiar? When you rent a property, you are at the mercy of the landlord. They have the final say over what happens in their own property, after all, and you need to play by their rules. Sometimes, this just isn’t fun! Maybe you really want to mount a TV on the living room wall. Or perhaps your first child just started walking and you’d like to put in a fence to make sure they don’t run into the street. Or maybe, just maybe, you decide you really don’t love the canary yellow paint in the master bedroom that you thought you’d be able to put up with. Whatever the case, if you are renting a property, you do not have the autonomy to make these decisions for yourself. You need to get everything approved by the landlord! Some landlords and tenants have great relationships, but we all know that isn’t always the case. When you own your property, you are the boss. If you can afford it, you can do it!
That wraps up our list of the top 6 reasons to buy instead of rent in 2021. This list was by no means exhaustive, but it gives you a quick idea just how much better buying can be for you instead of renting. Hopefully you learned a thing or two and feel more empowered to take the next step in your home buying process!
We at The Boyd Team are always here to help you figure out whether the Grand Strand is your next home or not, and we are committed to helping you find the right property for your needs and dreams. Any question that you have about moving to the area and finding your dream home by the beach is our pleasure to answer. Feel free to send us an email at email@example.com or text or call us at (843) 222-8566, and we will get back to you as soon as we can. Being true natives of the Grand Strand and Horry County and with over 25 years of experience in the local real estate market, whether buying or selling, we can help you make your dreams a reality. No One Knows the Grand Strand Better! Trust, Knowledge, Experience, Professionalism, You Can Count On!