Deciding whether to buy or rent is one of the most significant financial decisions many people face. The choice isn’t just about finding a place to live—it’s about shaping your financial future. Recent studies offer insightful comparisons between the financial realities of renting and buying, highlighting stark differences in income, net worth, and credit scores between homeowners and renters.

According to RubyHome, homeowners typically enjoy higher median incomes, averaging around $86,000, compared to renters, who earn about $42,500. This income disparity is also reflected in net worth, with homeowners boasting a median net worth approximately 40 times greater than that of renters. Such financial stability often translates into better credit scores; the average credit score for homeowners is 754, significantly higher than the 638 average for renters. This difference in credit scores directly impacts the mortgage terms and interest rates available to potential buyers.

These statistics underscore the broader economic implications of the decision to buy or rent. Understanding these factors can help you make a more informed choice about your housing situation.

Rent Or Buy House Pros And Cons.

The Financial Landscape of Homeownership

Since 1963, home prices have experienced a dramatic 23-fold increase, translating to an average annual growth rate of approximately 10.4%. According to the U.S. Census Bureau and the Department of Housing and Urban Development, the median home price in the United States in April 2024 was $433,500, while the average sales price was $505,700. The median listing price per square foot is currently $224, a significant rise from $144 in July 2018, marking a 56% increase over the past five years. The typical home size in the U.S. is 2,014 square feet. In the Midwest, home prices vary, with Wisconsin averaging $288,596, Illinois at $254,128, Michigan at $233,019, Indiana at $232,390, Ohio at $220,542, and Minnesota at $336,279.

Sales of new single-family houses in April 2024 were at a seasonally adjusted annual rate of 634,000, which is 4.7 percent below the revised March rate of 665,000 and 7.7 percent below the April 2023 estimate of 687,000. This data highlights the ongoing trends in the housing market and underscores the importance of understanding current market conditions when making decisions about homeownership. An expert lender can help you navigate these complexities.

The Benefits of Homeownership

Owning a home provides numerous benefits, including the ability to build equity over time, which can be a valuable financial asset. Homeowners can also take advantage of several tax deductions, such as mortgage interest and property taxes, which can significantly reduce taxable income. Furthermore, homeownership offers the freedom to personalize and improve your property, allowing you to create a living space that truly reflects your tastes and needs.

Real estate often appreciates in value over time, providing potential long-term financial gains. Homeownership also brings a greater sense of stability and security, as you have control over your living environment and are not subject to a landlord’s rules. Additionally, owning a home fosters a sense of community and engagement, allowing you to build relationships with neighbors and participate in local events. These factors combine to make homeownership a significant investment both financially and personally. Please consult with your tax advisor.

Choosing the Right Lender

Choosing the right lender is crucial in your journey to homeownership. The right lender can make the process smoother, help you get the best rates, and provide the support you need. Here are some key factors to consider when selecting a lender:

  1. Research and Compare: Start by researching different lenders and comparing their offerings. Look for lenders with good reputations, strong customer reviews, and a range of mortgage products that suit your needs.
  2. Interest Rates and Fees: Compare interest rates and fees from multiple lenders. Even a small difference in interest rates can save you thousands of dollars over the life of your loan. Understand the fees involved, such as origination fees, application fees, and closing costs.
  3. Loan Programs: Different lenders offer traditional and portfolio loan programs. Ensure the lender you choose offers the specific type of loan you need, whether it’s a conventional loan, FHA loan, VA loan or portfolio loans that fall outside the conventional loan criteria.
  4. Pre-Approval Process: A good lender will help you get pre-approved for a mortgage. Pre-approval gives you a clear idea of how much you can afford and shows sellers that you are a serious buyer. The pre-approval process should be straightforward and transparent.
  5. Customer Service: Excellent customer service is vital. You want a lender who is responsive, communicative, and willing to answer all your questions. A lender who prioritizes customer service will make the entire process much more pleasant.
  6. Local Knowledge: A lender with local knowledge can be a great asset. They understand the local real estate market, can provide insights specific to your area, and have a broad industry network.
  7. Referrals and Recommendations: Ask friends, family, and real estate agents for recommendations. Personal referrals can provide valuable insights into a lender’s reliability and service quality.
Toddfisher Headshot Web

Todd Fisher

Senior Mortgage Originator

NMLS #8465

Client Testimonial

“You will have to look long and hard to find someone as deserving of your business. Todd is a professional, considerate man who is knowledgeable and resourceful especially when it comes to residential financing and making things happen. You will have to look long and hard to find someone as deserving of your business. I have worked with him, referred my family, friends, and customers to him and he has always been responsive and professional.”

–Matt G.

At Oak Leaf Community Mortgage, powered by North Shore Trust and Savings, we are here to help you every step of the way. Explore our traditional and portfolio loan options and find the support you need to turn your homeownership dreams into reality.