By Donna Levos Coldwell Banker Weir Manuel
Recently our CEO Kelly Sweeney shared a quote in his sales meeting address about renting vs. buying:
“If you buy a home, you get to make mortgage payments for 30 years and then you get your money back through the asset you own. If you pay rent for thirty years you get to keep paying rent for the rest of your life!”
Have your clients considered homeownership as part of their retirement strategies?
Regardless of age, our clients should be thinking about retirement. Do they want to able to retire when and how they want? If so, they should consider the following factors:
Homeowners dodge rent inflation
Let’s talk about inflation. If rents increase annually at the typical 3.2%, a $1,500 rent payment will cost a renter $900,000 over 30 years. A homeowner paying that same amount in a fixed-rate mortgage payment would pay $540,000 and would be finite with the final mortgage payment.
Homeowners build equity over time
A renter will build no equity by writing that rent check for years. In contrast, a $300,000 home appreciating at a conservative 1% growth rate over 30 years will gain a $100,000 nest egg for the homeowner.
Homeowners get tax help
Consider the tax benefits involved in homeownership. By writing off your mortgage interest and property tax deductions, you are taking advantage of additional opportunities to save money.
Homeownership as a legacy
Finally, there are some things you can’t put a price tag on. For some people, the satisfaction of leaving their home to their loved ones is priceless. Additionally, unlike their renting counterparts, homeowners are able to customize, decorate and make improvements to their homes.
Just remember: long–term home ownership can provide retirement security through the growth of equity.
Kelly M. Sweeney is the Chief Executive Office of Michigan-based Coldwell Banker Weir Manuel.