Renting, and thinking about buying?

Here’s why that could be a great idea!


If you’ve been renting in Boise, and are hesitant about taking the plunge into home ownership, consider the financial freedom it could allow you down the road. “Owning a home is one of the most common ways households build long-term wealth, as it acts like a forced savings account,” says Ralph McLaughlin, Trulia’s Chief Economist. “Instead of paying your landlord, you can pay yourself in the long run through paying down a mortgage on house. That said, potential homeowners should go into home ownership with the expectation that wealth generation will be more akin to a marathon than a sprint.”

Monthly rental payments could compare to what you might pay in a mortgage payment in Boise. And, though you might not have the maintenance costs of owning a home, renting can’t stack up to the long-term financial benefits of buying a home. Kayla Albert, contributing writer for Trulia, offers these five reasons home ownership — and the financial security it offers — may be right for you:


1. Mortgage payments can be fixed

Average rental prices have seen significant jumps over recent decades, increasing 22.3% in the 50 biggest housing markets (for comparison, the cumulative rate of inflation for the period between 2006 and 2014 was 17.4%). As every renter knows, renewing your lease can be a nail-biting time of year if your landlord is prone to annual increases. Whether you’re at the end of your lease period with a current landlord or looking for a new rental, what you pay in rent is subject to change. But with a fixed-rate mortgage, your core payments won’t change for the entire length of your loan. “Property taxes and insurance may fluctuate, but your principal and interest are locked in,” says Eric Roberge, certified financial planner (CFP) and founder of Beyond Your Hammock.

2. Equity in your home can be a financial resource later

Paying off a mortgage during your working years allows you to remove a large expense from your plate during retirement. For retirees that see a drop in income once they start taking Social Security or pulling from their retirement accounts, this can be the difference between living a comfortable life and living paycheck to paycheck.

Additionally, Jennifer Harper, CFP at Bridge Financial Planning, suggests some homeowners could increase their level of financial security in retirement through a reverse mortgage. This allows you to live off the equity in your home while remaining in the residence. “There are a lot of complexities to consider, but it would be worthwhile to review with your financial adviser if you think your retirement savings are not quite where you’d like them to be,” she says.

3. You can build wealth without paying capital gains

Depending on the housing market and where you buy, there’s always a chance your home won’t appreciate in value. However, it’s certainly not uncommon to sell a home for more than you paid for it. If you earned that same profit selling off stocks, you could be required to pay 15% of the total earned in capital gains tax. But if you made the profit selling a primary residence you lived in for at least two years, you are exempt from paying capital gains. By preserving more of what you earn, you can build wealth faster.


4. A mortgage can act as a forced savings account

For those who haven’t made a habit of putting money away, paying a mortgage can create a savings cushion that renting cannot. “For people who do not trust that they can save money in a bank or investment account, this forced savings can benefit them down the road and actually help them grow their wealth,” explains Roberge. “Owning a home does not guarantee a higher net worth, nor does it remove the need to be financially responsible, but it does provide a structure within which one can build wealth.”

Are you already flexing your saving muscles by maximizing your tax-deferred retirement contributions? Harper suggests another way you can use your home to increase your financial security. “Consider making additional principal payments to your mortgage each month. Seeing the impact of interest on an amortization schedule is powerful!”


5. Overall, homeowners can enjoy greater wealth growth than renters

Research conducted by the Joint Center for Housing Studies at Harvard University concluded that homeowners experience a larger growth in wealth than renters, regardless of socioeconomic class. There are risks, the study acknowledges, but the financial benefits are undeniable. “Homeownership is a sound investment if a household can meet two basic requirements,” says McLaughlin. “One that they’ll stay put in the home for at least 5 years, and two, that they’re not paying an unreasonable amount of their income towards their housing payment.”

If you are thinking about home ownership in Boise, consider giving the Templeton Real Estate Group a call @ 208.473.2203. We are a small yet highly skilled real estate team with decades of area expertise, service, property pricing, and negotiating. We are passionate about providing our clients with the best real estate experience available. Our office is located in East Boise’s beautiful Bown Crossing, just steps to Boise’s Greenbelt. You can learn more about the Templeton Real Estate Group by reading what our clients say about us, on or contact us today to schedule your complimentary and confidential consultation. We can also sell your house faster and for more using the latest marketing and our beautiful and complimentary in-house staging expertise!