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Rent or Buy?


To rent or buy – one of the most important questions anyone can ask themselves in their financial lives.  The push to buy a house is back.

Those who sell houses are publicizing the rising costs of renting, and the low mortgage interest rates.  Right now, 30% a renter’s income is spent on rent.  It used to be 24% before the foreclosure crisis.  Real estate agents, and the mortgage bankers who feed them, try to convince people that a mortgage payment is 15% of their income.  In truth, it is often much higher because all the repair and insurance costs are now yours when you buy a house.


Rent or Buy?

The strategy is to lead people to think that owning a home is much cheaper than renting one.  Once a home buyer is open to the idea of buying a home, they are assured that they can afford more of a mortgage payment than they may be comfortable with.

Remember, real estate agents and mortgage agents make more money the more that you spend.

The best strategy to deciding on a home is to pre-qualify for a mortgage, and make a decision on how much you can afford BEFORE YOU SEE ANY HOUSES.  Remember, there are always expenses such as storm damage, flooding, broken heaters, etc.  Also, the closing costs are always more than you expect.  Don’t buy a home if you plan on staying there less than 5 years.

axsmith-law-renting-vs-buying-mortgageThe Foreclosure Effect

The foreclosure crisis has caused a lot of doubt in the minds of Americans about how good of an idea it is to get a mortgage to own a house.  Many articles are published about the good thing home ownership is.  Scratch the surface of this advice, and you will see that the source is someone who makes money when you buy a home.  Yes, caution is a watchword here.

It is almost funny that real estate agents are worrying about people renting their homes.  What was the expectation after 2008?  Almost everybody knows someone grievously affected by foreclosure abuses.  The economy tanked because of it, and many people lost their jobs who were otherwise making timely mortgage payments.

The Student Loan Effect

Another damper on demand is the heavy student loan debt carried by young people.  Historically, these were the first time home buyers.  Well, they can’t afford to purchase homes now.  If they decide to get a house instead of paying back student loans, they won’t qualify for a mortgage anyway.  This factor really hurts the real estate industry.

If you have problems related to foreclosure, debt relief, foreclosure mediation, phone Axsmith Law LLC at (202) 285-5415.




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