At some point we all ask ourselves if it’s smarter to rent or to purchase a home. This tends to be a rather controversial topic, but the true and honest answer is that each scenario should be examined on a case-by-case basis.
However, we do know that Nashville rent specifically is at an all-time high while the city was named one of 2017s hottest markets in the country by Zillow. So, what’s the simplified ideal scenario for buying a home in the city you love? Reasonably priced homes, lower interest rates and higher rent prices.
Here are some definite points to consider when making your pros and cons list for buying your first home.
You’re Making an Investment
It is important to remember that beyond the potential difference in the dent to your bank account on a monthly basis, purchasing a home is an investment. In a cycle where home values are steadily on the rise, the gain in equity in your home as the value rises, is an added bonus. When you rent, you’re not seeing the benefits of those equity gains, your landlord is.
Having a landlord has some benefits. If the toilet breaks, or the kitchen needs repainting, the land lord will usually take care of general maintenance or wear and tear on the home. When you are a homeowner you are responsible for these fixes. On the upside, this also means you can do anything you want to your home! There are no painting restrictions, pet restrictions, building restrictions set by the landlord. You have the freedom to fully customize your space!
A Fixed Mortgage Can’t Go Up
Some mortgages have an initial fixed-rate period before they become an adjustable-rate, where the interest rate can change yearly. For borrowers with a fixed-rate mortgage, the payments will be the same from year to year.
Unlike rent which will usually go up annually unless you’re incredibly lucky, a fixed mortgage won’t go up, even when inflation does. As a renter, your yearly rent increases are at the mercy of your landlord and have the potential to jump more drastically.
Your mortgage includes an interest payment monthly. These interest payments are essentially the cost of financing a home. Only a portion of what you are paying monthly for your mortgage goes to the principal balance, the rest goes towards the interest. Homeowners are able to write off their mortgage interest payments to reduce their taxable income. And who doesn’t like a tax break?!
If you’re looking to make the jump from renter to homeowner, our Armstrong Real Estate agents want to help you. Looking for a first-time home in Nashville? Click HERE to view listed homes in Nashville! Give us a call @ 615.807.0579 for questions!