Reasons to buy a home versus renting one

Buying a home is likely to be the largest purchase many of us will ever make. So how do you know if the time is right to embark on your path to homeownership? Despite rising interest rates and an uncertain housing market, owning a home is still the American dream for many New Mexico renters.

Here are three questions to ask when deciding if now is the time to buy:

1.   Can buying a home keep my housing payments stable and predictable from year to year?

Yes, payments on a fixed-rate 30-year mortgage remain constant over the life of the loan. If you’ve been to the grocery store recently then you’ve seen the impact of inflation, and rent prices are no exception. While the size of the next rent hike is hard to predict,  paying more money for the same apartment is almost inevitable if you rent long enough.

Because payments on a fixed rate mortgage don’t change, while theprice of everything else goes up, your house payment stays the same.  Many homebuyers find that their first mortgage payment is less than they were paying in rent; but even if it doesn’t start out that way, buying and owning a home will ultimately be cheaper than renting. 

2. Can owning a home in New Mexico build wealth?

Yes, buying a home is the way many Americans invest for the future because real estate gains value over time. Despite a few dips, like the subprime lending crisis of 2007-2008,  home values have tracked upward over the last 60 years. Reference: https://fred.stlouisfed.org/series/MSPUS#

The value of buying a home

While nothing in life is guaranteed, if you buy and maintain a house, it is very likely to be worth more than you paid for it in just a handful of years and each mortgage payment you make builds equity, bringing you one step closer to owning your home outright and storing up value that can be leveraged for home improvements or major expenses like a child’s education.

One day, your new home will be worth more than what you paid for it. At that point, you may decide to sell and profit from its higher value. Or you may decide to stay and pay your home off entirely, so you can live mortgage-free, leaving more money for other things, especially as you near retirement.

The value of renting a home

When you rent, the only person building wealth is your landlord! The money you spend on rent each month is invested in their childrens’ future, not yours. If the property you are renting increases in value, you won’t see a penny of profit; but you probably will receive notice that your rent is going up, again.

3. Can ownership make a house a home?

There are lots of reasons for buying a house that have nothing to do with money.  Many homebuyers are looking for the freedom to decorate their home inside and out, making it into the welcoming space they’ve always dreamed of. Whether it’s getting a dog, finally being able to grow your own tomatoes or having the house with enough room for everyone on holidays, your dreams are much easier to bring to life when you’re the one calling the shots.

Ready to stop renting in New Mexico?

Homewise is a nonprofit homebuilder and lender whose mission is to help create successful homeowners and strengthen neighborhoods so that individuals and families in New Mexico can improve their long-term financial wellbeing and quality of life. Our award-winning homes are quality-built, energy-efficient, and affordable and our client-centered, comprehensive approach to real estate means you’ll never be without the support you need in selecting, buying, and financing your new home.

 

Homewise can help you buy a home

Homewise makes it simple: we offer everything you need to buy a home in New Mexico, all under one roof—from free coaching and workshops to real estate services to affordable, fixed-rate mortgages. We have a proven process of working with clients at all levels—from first time homebuyers to existing homeowners looking for their next new home. Take the first step on you’re path to homeownership by contacting us today.

 

 

About the Author:
Kelly O’Donnell

Kelly O’Donnell

Kelly O’Donnell, Chief Research and Policy Officer. Kelly joined Homewise in 2021. Prior to Homewise, O’Donnell was a research faculty member at the University of New Mexico and a private economic and public finance consultant for governments and nonprofits in New Mexico and nationwide. Prior to that, she held a series of senior leadership roles in New Mexico state government including Director of Tax Policy, Deputy Cabinet Secretary for Economic Development and Superintendent of the New Mexico Regulation and Licensing Department and served as research director for New Mexico Voices for Children. She holds a PhD in Economics from the University of New Mexico.

Kelly O’Donnell

Kelly O’Donnell

Kelly O’Donnell, Chief Research and Policy Officer. Kelly joined Homewise in 2021. Prior to Homewise, O’Donnell was a research faculty member at the University of New Mexico and a private economic and public finance consultant for governments and nonprofits in New Mexico and nationwide. Prior to that, she held a series of senior leadership roles in New Mexico state government including Director of Tax Policy, Deputy Cabinet Secretary for Economic Development and Superintendent of the New Mexico Regulation and Licensing Department and served as research director for New Mexico Voices for Children. She holds a PhD in Economics from the University of New Mexico.