Misconception No. 2
Renting a a home isn’t all that different from owning.
The Reality – More so than apartment dwellers, the lives of people who rent a house can often mirror those of actual owners. You’ll see many home renters making routine repairs, gardening, shoveling the driveway when it snows or cleaning the gutters after the leaves fall.
But there is one fundamental difference. Unlike equity built with each monthly mortgage payment, the rent that person is paying is producing zero future financial benefit. In fact, a renter essentially paid the landlord’s mortgage and likely additional utility costs.
Since most homes increase in value over the long term, a home not only provides a place to live but will ultimately provide return on a consumer’s original investment. Additionally, when it comes time to apply for other forms of credit, responsible homeowners are more desirable borrowers.
Paying a mortgage on time each month shows lenders that a consumer is secure, stable and effectively manages finances. And those home renters who take it upon themselves to help make property updates and repairs? They’re building equity – just not their own.
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