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Renting can be stressful. You’re often limited with space, decorating, and who you’ll share a wall with. This could be your year to break the rental cycle and advance into homeownership.
According to Realtor.com, 74.2% of renters who moved between October 2021 and October 2022 reported seeing their rent increase. In addition, the same report read that 63.2% of renters that lived in their current rental residence between 12 and 24 months and renewed their leases also had reported increases in their rent.
In contrast, having a fixed rate mortgage would mean your monthly payments stay the same for the length of your mortgage loan. Even if inflation or interest rates were to rise, your payments would remain consistent.
Moody’s Analytics found that in 2022, 30% of the median U.S. income is required to pay the National average rent, an increase from 28.5% the year prior. While this may seem low, The Federal Reserve and the U.S Department of Housing and Urban Development define “rent burdened” households as spending more than 30% of income on housing and “may have difficulty affording necessities such as food, clothing, transportation, and medical care.”
Realtor.com is predicting rents will hit a new high this year. Their 2023 National Housing Forecast projects that rents will continue to increase by another 6.3% before year’s end. This is due in part to a combination of limited supply and excess demand, which is especially high in urban areas within big metros.
When you own a home and make payments, you’re investing in your own assets and building equity. When your property’s value increases, you also earn equity. Equity is the percentage of your home that you own. As you pay down your loan, your equity grows. In a Homeowner Equity Insight report from CoreLogic, it was estimated that in 2022, the average homeowner gained nearly $35,000 in equity over just twelve months.
When you’re a renter, your monthly payments go toward your landlord’s mortgage and creating their wealth instead.
Are you ready to break the rental cycle and own your own home this year? Contact us today. Each of our Loan Originators have access to diverse loan programs, exclusive market knowledge, and the drive to get you to closing.
Homestead Funding offers exceptional customer service and a convenient mortgage process. Whatever your financing needs, our goal is to exceed your expectations.