By Ryan Velez
It is often said that people who rent for life would be able to buy a home with all the money they spend over time. While prices in different regions play a role in this saying, there is a reason for its popularity. Mortgage Coach President Joe Puthur recently wrote an article for Black Enterprise explaining the “rental trap” and how misinformation results in many people being too afraid to make the leap to homeownership, even when it can benefit them.
Puthur starts out with a story of Geoff and Kristi, two people who lived as renters for the first seven years of their marriage and passed off on buying a house for reasons ranging from unstable job security to high mortgage rates. While in time, they would buy just to get equity for a growing family and the money they were putting out. However, there’s no telling how many opportunities they missed.
Puthur provides some insight for people looking to get a mortgage for the first time. For one, your best option is not always about the rate. “Many loans come with advantages such as working in the cost of planned renovations—like adding a bathroom or modernizing a kitchen—into your loan. When shopping for a loan, do not just look at the rate as the bottom line; find out what types of perks different loans offer,” he explains. Sometimes, your occupation may help you. Many lenders have discounted closing rates for teachers, doctors, firefighters, and police officers. Be sure to check for yours and do research to see if you can find a lender with these types of programs. The same applies to veterans and current service members in the military.
Part of buying a home is understanding that you’re not just making a massive purchase, but the largest investment many will ever make. For example, every month you make a mortgage payment, you build equity, the portion of the property that you actually own, versus what you still owe. This equity is something you can leverage for important purchases like college funding, investment properties, as well as security for your retirement. “A mortgage is not a typical loan, it is a financial instrument enabling wealth creation and access to affordable homeownership. Interest rates on a quality mortgage continue to be below 5% regardless of program,” Puthur says.