5 ways to build wealth without buying a home
For many, home ownership is an integral part of the American dream. That doesn’t mean it has to be your dream too.
Maybe you don’t need a space or garden for your dog. You might not think real estate is the best investment out there.
Or maybe you just can’t handle it How can you afford a mortgage?.
Either way, people will tell you renting is like burning your money – but in reality, being a renter can come to your financial advantage. Here are five ways to thrive.
1. Benefit from reduced pandemic rents
At the beginning of the pandemic, rents plummeted in expensive cities like New York and Seattle. While prices have rebounded in most areas, they are likely below what they would have been without the crash.
Plus, real estate data website Apartment List says there are still five major cities where rents are high under Pre-Pandemic Levels: San Francisco, Oakland, San Jose, Minneapolis, and Washington, DC
As a tenant, you can use this to your advantage. Working from home is sure to be the norm for a while, with people flocking to medium-sized markets and smaller towns for more space.
If you want to keep renting around town, now is the time to get a great deal on lease – you may even be able to negotiate an even better rate with your current landlord.
2. Find better investments than owning a home
Many people believe that a home is a good investment, but that’s not necessarily true.
A US Federal Reserve from 2010 report entitled “American Dream or American Obsession?” showed that the actual return on US real estate was below 0% between 1975 and 2009.
Meanwhile, the average annual return on the stock market between 1975 and 2009 was 3.375% after taxes and inflation, according to the Fed study.
Today it has never been easier to bring money to market – All you need is a smartphone app.
3. Use the money you save to pay off debts
Owning a home comes with a number of non-refundable costs such as mortgage insurance, home insurance, interest, and property taxes. And if something breaks, you have to fix it yourself instead of just calling the landlord.
When you as a tenant save all of the money, you can use it for debt consolidation.
If you relied on your credit cards during the pandemic, you are now probably piling up tons of expensive interest. By dropping all of your balances into one low interest debt consolidation loan, you can manage your debt more easily and even pay it off sooner.
4. Invest in yourself
Improving your marketable skills by going back to school is never a bad idea.
If you don’t have all of the funds upfront for a college program, taking out a student loan at a competitive price can help make your dream come true without costing all of your savings.
But that assumes you haven’t been drowning in student loan debt since your first college leap. If that’s your situation, you might want to explore Refinancing your student loan to benefit from today’s record-low refi rates.
5. Look for offers
The premise that living is better than renting also assumes that owning a home is your # 1 priority without considering any other goals you may have about your money’s worth or what you might want to do with your life.
As a tenant who doesn’t have to worry about the cost of owning a home, you have more money to spend on the things that are really important to you. Your standard of living will be higher overall.
For example, if you want to shop online, you can download it a free browser extension who will immediately find you the best offers and coupons.
“But owning a home is my dream”
If becoming a homeowner is your heart, then you are not necessarily meant to be poor.
Just follow these tips to get yourself in the best financial position:
Get the Lowest Interest Rate on Your Loan. The best way to save on your mortgage is to Comparison shop for the lowest mortgage rate. Several studies have found that borrowers who review at least five interest rate offers save thousands of dollars over time, compared to those who take out the first loan they see.
Find the best price for home insurance. Home insurance is a must, but overpayment is not. from Shopping for your coverage, you can pay hundreds of dollars less for home insurance every year.
Save yourself a respectable deposit. A higher down payment can result in a lower mortgage rate. Save tons of money by using a popular app that lets you invest your “change” and grow your money on the record breaking stock market.
This article is for information only and is not intended as advice. It is provided without any guarantee.