Opinion: What to consider in rent versus mortgage scenarios

Jami Dressler

When it comes to remaining a renter or becoming a homeowner, there are definite pros and cons to each. However, the advantages of homeownership, even now, may outweigh those of long-term renting. Owning a home can build wealth in the long run and have positive tax implications, helping it be a more cost-effective alternative to renting.

A drawback of renting is the risk of annual rent increases. According to Rent.com, the current median rent in Missouri is $1,157. That’s a 2.95% increase over 2022. Renters also have less flexibility when it comes to customizing their space and could be forced to move with short notice if the landlord sells the property.

For those looking to make the jump from renting to owning, an experienced real estate and mortgage lending professional will be able to help navigate their unique situation and get them into a home that’s the right fit.

There may be more options to consider than many realize.

Buyers in the Springfield area might consider using a rehab loan to purchase and remodel a home that needs some tender loving care and updating. Qualified first-time homebuyers still have options that require no down payment and no private mortgage insurance, like various bank programs that empower homeownership success through financial education requirements.

Though adjustable-rate mortgages received a bad reputation in the 2008 market, they aren’t the same today.

An adjustable-rate mortgage can be beneficial not only when we are in a higher-rate environment, because they could drop as rates cycle, but adjustable-rate mortgages can also offer advantages to those who may not be staying in their homes long term.

In today’s market, it’s also important to remember that mortgage rates are always changing.

While you may not get the rate you were hoping for if you buy today, you may have the option of working with your lending professional to refinance to a lower rate in the future.

Even if the rates don’t drop back to the historic lows of 2020 and 2021, you could still reap the benefits of a rate that’s lower than when you first purchased your home.

Bankers have been seeing rates in the low 6% range and are hopeful to see them drop to the 5% range in the foreseeable future.

While 6% may feel like a sting compared with the 2%-3% rates from 2020 and 2021, remember that those were historically low rates, and they may not drop back to those levels any time soon.

Finally, the best thing a potential homebuyer can do is find a lending professional who will help them identify the scenario that best fits their needs and budget and then work on the lending solution that will turn that scenario into reality.

Jami Dressler is a vice president and mortgage loan supervisor for Arvest Bank in the Springfield market. She may be reached at jdressler@arvest.com.