Mortgage 101
February 22, 2024

Escape the Rental Cycle with Homeownership

Estimated reading time: 2.5 minutes

Are you tired of being trapped in the rental cycle? You’re not alone! As prices continue to rise, many renters are entering the homebuying process to protect their finances and peace of mind. Let’s explore how to break free of renting and begin the path to homeownership!

Why Choose Homeownership?

Fixed Mortgage Payments Each Month

According to Newsweek, landlords routinely increase rent prices because of inflation and the changing housing market. Meanwhile, your monthly mortgage payment is determined by loan terms and interest rate. If your mortgage has a fixed rate, your payment will remain consistent for the lifetime of your mortgage. An adjustable-rate mortgage will change after a designated time. You’ll never be caught off guard by an increasing rent payment, allowing you to appropriately budget and allocate your finances where necessary.

Build Your Wealth, Not Someone Else’s

When you pay rent, your payment goes toward your landlord’s mortgage and debts. Instead, your monthly mortgage payment builds your own wealth. As you pay down your mortgage’s principal and interest, you earn equity.

In the first quarter of 2023, the average American homeowner had over $274,000 in equity. Equity can be taken out and used for various things, like consolidate debt, home renovations, or even tuition.

Renting Costs More in The Long Run

The Joint Center for Housing Studies of Harvard University released a report in January 2024 regarding rental affordability across the United States. They found that rent unaffordability post-pandemic has hit an all-time high as rent increases are outpacing income gains. According to Zillow, rent prices are now 29.4% higher than they were before the COVID-19 pandemic. For reference, that’s a yearly average increase of 7.5%. In 2018 and 2019 before the pandemic, the average rent growth was 4.1%.

Rather than falling, Capital Economics believes rent increases will flatline in 2024, allowing renters the perfect opportunity to take control of their savings and credit to begin the journey to homeownership.

While many renters worry about high upfront costs for a home purchase, like closing costs or a down payment, there are resources available.

Loan Programs with Lower Down Payments

While many people believe you need a 20% down payment to buy a house, it’s simply not true. Since 2018, the typical down payment for a first-time homebuyer has ranged between six to seven percent, according to the National Association of Realtors. We offer low down payment options through our Conventional, FHA, VA, and USDA loan programs.

Down Payment Assistance

With over 2,000 different down payment assistance programs available around the country, there may be one for you! These programs are offered loans and grants used to cover a portion or all of a person’s down payment and closing costs.

Use a Mortgage Lender Who Cares

The front walk to a white brick home. The front door is teal with gold accents. A light is on and visible in the front window.

If your finances and credit are ready, it’s time to stop paying your landlord’s mortgage and start building your own wealth! Contact us today to learn more about how homeownership can work for you!

Ready to get started?

Homestead Funding offers exceptional customer service and a convenient mortgage process. Whatever your financing needs, our goal is to exceed your expectations.