Virginia Real Estate Blog

Still Renting Your Home? 4 Facts That Might Change Your Mind

Each year, home renters face the question of whether to renew their lease for another year or determine it is time to buy a home of their own. Over the past couple of years, the US housing market has changed dramatically as home values have soared and interest rates have remained low. So, if you are still renting your home, it might be time to buy instead.

4 Facts About Renting your Home

1. Rents Are Rising Quickly – Higher priced home values drive higher rent costs. While a 30-year fixed home loan will provide steady monthly payments for the duration, most renters are shocked to see their housing payments rise each year.

2. Paying for Your Landlord’s Equity – As home prices rise, so does the equity in the property. As a renter, you are making the loan payments for your landlord, while they reap the benefit of increased equity.

3. You Get What Your Get – A homeowner can paint, renovate, and customize the home to their heart’s content. A renter must live with the choices the landlord made about décor.

4. No Tax Benefits – Homeowners can deduct the home mortgage interest and property taxes off their gross income, offering huge tax savings.

With a wide variety of home loan programs available, buying a home may be more affordable than you think. If your lease is up for renewal, this could be a good time to consider the benefits of homeownership instead.

Would You Buy Your Home Again?

Buying a home is often an emotional decision; perhaps even more so than a practical, financial decision. Real estate marketing has recognized this for decades which is why agents have emphasized curb appeal and staging to their clients. Open houses have featured the smell of fresh baked cookies and soothing music, all in an effort to appeal to the buyer’s sense of home and comfort.

Many homeowners ponder this question, along with whether they can make adjustments via remodels or additions. The fact is that our tastes, needs, and lifestyles change and evolve over time. The past few years have dramatically changed the way we look at our homes. More people than ever before now work from home. That cute cottage or condo might have been the perfect home base for evening and weekend activities, but fall short of the ideal full-time work space.

On the other hand, some homeowners have realized that they have under utilized their property. During the pandemic, we saw home cooking, gardening, and crafts boom. Yards have been redesigned to include vegetable beds and fruit trees. Kitchen remodels have emphasized cooking space and gathering areas for family.

For anyone who has lived in their home for 7+years, it’s natural to wonder if the property still suits their needs. Families grow and contract, lifestyles and jobs change, and as life moves on, homeowners should periodically ask themselves if they would buy their current home today.

Rising Interest Rates – Should I Lock in the Mortgage Rate?

One of the most important financial considerations of buying a new home is the interest rate paid on the mortgage. Over time, a higher interest rate can add thousands of dollars to the true cost of buying the home. When interest rates are low or steady buyers have greater confidence that they will get a favorable rate when they go to secure the loan, but in our current environment of rising interest rates, many lenders are suggesting a rate lock at the time of pre-approval.

What is a Mortgage Rate Lock?

A rate lock freezes the interest rate on a mortgage for a period of time before the close of the loan. Typically lasting for 30-60 days, the lender guarantees the rate will not change during this period for a fee that is paid when you agree to the loan terms.

A mortgage lock protects the borrower from rising interest rates while the loan is processed and approved.

When should you lock in a Mortgage Rate?

Lenders will offer to lock in the rate at the time of loan approval. With escrow periods of 30-60 days, the lock assures the buyer that their rate will not increase during the time it takes to complete the loan process.

In a period of rising interest rates, as we see today, locking the rate may be a smart idea. The borrower will pay a higher fee for the lock, as the lender is also taking a risk, but it could be worth thousands of saved dollars over the life of the loan. Even a small increase in the interest rate can have a huge financial impact.