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In an inflationary economy, prices rise across the board. Historically, homeownership is a great hedge against those rising costs because you can lock in what’s likely your largest monthly payment (your mortgage) for the duration of your loan.
That helps stabilize some of your monthly expenses. James Royal, Senior Wealth Management Reporter at Bankrate, explains:
“A fixed-rate mortgage allows you to maintain the biggest portion of housing expenses at the same payment. Sure, property taxes will rise and other expenses may creep up, but your monthly housing payment remains the same.”
And with rents being as high as they are, the ability to stabilize your monthly payments and protect yourself from future rent hikes may be even more important.
When you rent, your monthly payment is determined by your lease, which typically renews on an annual basis.
With inflation high, your landlord may be more likely to increase your payments to offset the impact of inflation.
That may be part of the reason why a survey from realtor.com shows 72% of landlords said they plan to raise the rent on one or more of their properties in the next year.
If you’re ready and able to do so, becoming a homeowner can provide lasting stability and a reliable shelter in times of economic uncertainty. The best hedge against inflation is a fixed housing cost. If you’re ready to learn more and start your journey to homeownership, contact us at 949-444-1601.