With interest rates still relatively low but predicted to start rising, buying a house right now is less expensive than renting in many places, including Memphis, TN.  Now is a great time to lock into a rate.

Buying is often considered to be financially better than renting over the long run because your mortgage payments build equity in your home, which you will eventually own, while rent only goes toward the upkeep of your home and the wallet of your landlord.  That is just one reason buying is better than renting. Here are some others:

  • You can do what you want with your property. Making home improvements will be your choice, from the colors to paint the walls, to light fixtures, to types of floors and more. You won’t need permission from a landlord to make changes.
     
  • Tax benefits. Tax deductions are a great perk of home ownership. Homeowner Tax Benefits 2019
     
  • Stable monthly payments. Rents can go up, but with a fixed-rate mortgage, your monthly payments won’t change.
     
  • Forced savings.  Renting might seem less expensive, but would you save the money you don’t spend on rent?  Since your mortgage payments are building equity in your home, which you can later sell for profit, it’s like a forced savings.

Using a Rent vs. Buy Calculator you can see how buying is a better financial option right here in Memphis. For example, after 2 years the cost of homeownership (down payment, mortgage, taxes, etc.) for a $85,800 home in Memphis would be $40,187. The total cost to rent the same house for that period would be $25,683.  Renting would leave you with $14,503 in your pocket (including the money you didn’t spend on a down payment).  So, it would seem that renting would be better financially, right?  But wait…not so fast.  Let’s look at what you gain over the same 2-year period if you buy.  After 2 years, your home will have $28,418 in equity. However, if you instead rent and invest your down payment and other money you save at a 6% return rate, it will earn around $1,743 in 2 years.  So, if you look at your gross costs, equity and investment potential, it’s better for you to buy than rent if you plan to live in your home for more than 1 year and 6 months.

The bottom line is, if you’ve been thinking about buying a home in the Memphis area, don’t wait! Start investing your money in your own home vs that of a landlord today!

If you are in the market to buy or sell a home in the Memphis area, contact professional Realtor, Melissa Thompson, and let her help you with all your real estate needs. Give her a call at 901-729-9526 today!