Skip To Content
  • Home
  • Real Estate News
  • The Truth: Taking out a High Interest Rate Mortgage VS. Becoming a Long-Term Renter

The Truth: Taking out a High Interest Rate Mortgage VS. Becoming a Long-Term Renter

It feels like an eternity since we’ve had to use the phrase “High Interest Rate Mortgage” to define our current mortgage rates. After being conditioned for years to expect mortgage rates below 5%, it’s no surprise that 7-8% rates seem like sheer insanity. Whether you think it’s insanity or not, we can’t deny the fact that buyers now have an opportunity that hasn’t existed in our market for YEARS, an official buyers’ market. 

For the last 7 years or so I’ve had countless buyers tell me they were going to wait for the market to cool down to purchase a home. Thus, returning to the rental market and postponing their home purchase journey for another 12 months or more in hopes of coming out on the better end of the market. Now that the better market is here those same buyers are deciding to postpone purchasing again in fear of the rising rates and potential of falling home prices.

From a buyer’s perspective, it seems like they just can’t catch a break. First, home prices are skyrocketing, there’s a bidding war on every available home, homes are selling way over list and with limited inspections, the worst. Now, buyers don’t have to worry about nearly any of this, but now interest rates are sky high and the same home they could have bought a year ago costs nearly double when comparing mortgage costs. No wait, that’s the worst. 

Wait, what is actually the worst in those two scenarios?  Trick question, the worst is being conditioned into believing your best and only option is to RENT! We’ve all heard the phrase “the best trick the devil ever pulled was convincing the world he didn’t exist” right? Right now, corporate landlords aren’t worried about high interest rates. In fact, they love every time those rates go up because they know they are going to come out looking like the savior. 

Here’s the deal as plainly as I can make it: When interest rates go up so does rental demand. As rental demand goes up so does the rental rate. The rental market in general has taught consumers they are the safe option. No need to worry about overpaying for that house or waiving an inspection, just rent. No need to worry about high interest rates and the possibility that home values might drop, just rent. Concerned about anything to do with housing? Just rent. 

Meanwhile, that rent payment you’re making month after month is netting you absolutely nothing and you’re paying that corporations mortgage for them. Sure, interest rates are 7%, but rental rates are 100%!! 

Purchasing a home is meant to be a long-term investment usually with a minimum of 5 – 10-year payout. These last few years have been a bit crazy, and consumers have become accustomed to massive home value growth in 1-2 years, which just isn’t realistic long term. But, those that did purchase a home over the last few years are sitting back feeling fairly comfortable with a 2-3% mortgage and no worries about whether or not their landlord is going to increase their rent next month or next year. 

Now look, I’m a Realtor and a lover of all things Real Estate. I sell homes for a living and it’s easy for a buyer or seller to consider what I say to be pure BS. But, I watch the market both locally and across the country DAILY. I speak DAILY with those families that would love to buy a home and get scared, only to turn around and be forced back into renting because of the rising costs. In the end they get stuck renting because they never build up any net worth for themselves while rental rates increase unchecked and the only option they have is to keep moving further and further away where it’s a little cheaper. Corporations are PREYING on renters and know that one of the safest long-term investments is OWNING REAL ESTATE, especially when someone else is going to pay for it. 

I completely understand that everyone has to make tough decisions about their housing situations and sometimes it does make the most sense to rent, but it should always be the short term goal. Landlords LOVE long term renters for a reason and it’s so important to consider your options. 

If you’re interested in buying or selling a home right now I would love to talk with you about how I can help and how we can help reduce your interest rate and make home buying more affordable. As always you can reach me directly anytime at 980-250-2795. 

Check out my latest client testimonial! “My wife and I were delighted with the service we received from our Briggs American broker, Matt Lawson. He handled both our sell and buy transactions with complete professionalism and integrity and allowed us to achieve excellent results. The marketing effort he put together for our property was exceptional. We know we weren’t his only clients but the responses we received made us feel like we were.” M. Edwards

Matt Lawson, MBA is the Owner and Broker in Charge of Briggs American Homes, a real estate team at REAL Broker, LLC. Matt lives and operates his business right here in Waxhaw, NC and is passionate about all things Real Estate.

Trackback from your site.

Leave a Reply

*
*