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Is an Adjustable-Rate Mortgage Right for You? A Homebuyer’s Guide
If you’ve been shopping for a home lately, you’ve likely felt the pressure of today’s affordability challenges. Higher home prices and mortgage rates have made it harder for many buyers to stay within budget. That’s one reason adjustable-rate mortgages, or ARMs, are getting more attention again.
For some homebuyers, an ARM can offer welcome savings upfront. But before you go that route, it’s important to understand how these loans work, why they appeal to certain buyers, and what the long-term risks might be.
What Is an Adjustable-Rate Mortgage?
An adjustable-rate mortgage is a home loan that starts with a fixed interest rate for a set number of years. After that initial period ends, the rate can adjust at scheduled intervals based on market conditions.
As Business Insider explains:
“With a fixed-rate mortgage, your interest rate remains the same for the entire time you have the loan. This keeps your monthly payment the same for years . . . adjustable-rate mortgages work differently. You’ll start off with the same rate for a few years, but after that, your rate can change periodically. This means that if average rates have gone up, your mortgage payment will increase. If they’ve gone down, your payment will decrease.”
That’s the biggest difference between a fixed-rate mortgage and an ARM. A fixed-rate loan offers predictability, while an ARM may give you a lower payment at first but less certainty later.
It’s true that costs like property taxes and homeowners insurance can still change with a fixed-rate mortgage. But the principal and interest portion of the payment generally stays steady. With an ARM, your monthly payment can rise or fall once the fixed period ends.
Why More Home Buyers Are Considering ARMs
The main reason buyers look at adjustable-rate mortgages is simple: lower initial costs.
Business Insider puts it this way:
“Because ARM rates are typically lower than fixed mortgage rates, they can help buyers find affordability when rates are high. With a lower ARM rate, you can get a smaller monthly payment or afford more house than you could with a fixed-rate loan.”
That upfront savings can matter, especially in a market where every dollar counts. Recent reporting from Mortgage News Daily and The Wall Street Journal show that ARM rates have been coming in lower than 30-year fixed mortgage rates.
For many buyers, even modest monthly savings can make a difference. For example, Redfin found that a typical buyer could save about $150 per month by choosing an ARM instead of a 30-year fixed mortgage. Savings like that can help some buyers qualify for a home sooner or make their monthly budget more manageable.
Why Adjustable-Rate Mortgages Are Making a Comeback
More homebuyers are deciding that a lower payment today is worth considering, even if it means taking on more uncertainty later.
Recent reports from the Mortgage Bankers Association (MBA) show that the share of buyers choosing ARMs has increased in recent years. That doesn’t mean ARMs are becoming the right fit for everyone. But, it shows that some buyers are using them as a strategy to deal with affordability challenges in the current market.
For anyone who remembers the 2008 housing crash, this trend may sound concerning at first. But today’s lending environment is very different.
In the past, some borrowers were approved for loans they couldn’t realistically afford once the interest rate adjusted. Today, lending standards are tighter, and lenders generally evaluate whether borrowers could still manage the payment if rates rise. So while ARMs are becoming more common again, that alone doesn’t point to another housing crisis.
The Pros and Risks of an ARM
An adjustable-rate mortgage can make sense in the right situation, but it depends on your financial plan and your comfort with risk.
An ARM may be worth considering if:
- You expect to move before the rate adjusts.
- You believe your income will increase over time.
- You need a lower initial payment to make homeownership possible now.
Still, there are trade-offs to consider.
Once the fixed-rate period ends, your interest rate can change, and your monthly payment could increase significantly depending on where mortgage rates are at that point. There’s also no guarantee rates will fall in the future, which means refinancing later may not be as easy or as beneficial as some buyers hope.
That’s why it’s important to think beyond the introductory rate. Make sure you understand how long the fixed period lasts, how often the rate can adjust, and how much your payment could increase over time. Most importantly, talk through your options with a trusted lender and financial advisor before making a decision.
Bottom Line: Is an ARM Right for You?
Adjustable-rate mortgages are regaining popularity because they can make buying a home more affordable in the short term. For some buyers, that lower upfront payment can be a helpful tool. But an ARM isn’t necessarily the right move for everyone.
The best decision comes down to understanding how the loan works, weighing the risks, and making sure it fits your long-term goals.
If you’re considering an adjustable-rate mortgage yourself but are still on the fence, reach out to us today. We can connect you with a qualified lender in your area who explore your options with you.
Should You Still Buy a Home Right Now? What Buyers Need To Know
Between nonstop economic headlines, global uncertainty, and ongoing concerns about affordability, it’s understandable to wonder whether now is still a smart time to buy a home.
The good news is this: current events may be influencing the housing market, but they have not taken homeownership off the table. For many buyers, the opportunity is still there. It just may require a more thoughtful strategy than it did a few months ago.
Mortgage Rates Have Risen Slightly. Here’s What’s Behind It
After trending downward for much of 2025, mortgage rates have climbed again over the past month. Experts point to a mix of global events and broader economic pressures as key reasons why.
As Mark Fleming, Chief Economist at First American explains:
“Mortgage rates have recently moved higher, driven by geopolitical uncertainty and rising energy costs that are contributing to inflation concerns.”
So what does that mean if you’re thinking about buying a home? Should you wait for conditions to settle before making a move?
Not necessarily.
Your Opportunity To Buy Hasn’t Disappeared
There’s no denying that buying felt a bit more affordable when mortgage rates were closer to 6%. Now that rates are hovering in the mid-6% range, monthly payments are naturally a little higher.
But it helps to take a step back and look at the bigger picture.
For example, if you’re financing a $500,000 home, a rate in the mid-6s could still mean a monthly payment that is roughly $300 lower than what buyers were facing early last year.
That means today’s higher rates have not erased all the progress we’ve seen. In fact, buying a home can still be more affordable than it was just a year ago.
Yes, your payment may have been lower a few weeks ago. But trying to perfectly time the market rarely works in your favor. Conditions can shift quickly, and hindsight always makes past decisions look easier.
Instead of waiting for the “perfect” moment, focus on making the best decision based on your goals, finances, and today’s market conditions.
Expect Mortgage Rate Volatility
One thing buyers should be prepared for is continued movement in mortgage rates.
Rates may keep rising or falling in the weeks and months ahead as new economic reports are released and world events continue to unfold. That kind of uncertainty can feel frustrating, but it’s also part of today’s market.
The truth is, you can’t control what happens with inflation, global events, or mortgage rates next week. What you can control is how prepared you are when the right opportunity comes along.
That preparation can make all the difference.
If You Need To Move, You Still Have Options
For many buyers, the decision to move is not just about market timing. Life keeps moving, even when the market feels unpredictable.
Maybe your family is growing. Maybe you’re relocating for work. Maybe your current home no longer fits your lifestyle or needs. Those reasons still matter, and they may be more important than waiting for rates to change.
Buyers who are moving forward right now are often doing so because their personal situation makes it the right time.
And the good news is there are still strategies that can help make a purchase more manageable.
For example, some buyers are exploring adjustable-rate mortgages (ARMs) to secure a lower initial rate. That approach is not right for everyone, but it’s one example of how flexibility and planning can create opportunities in today’s market.
A Smart Plan Starts With the Right Experts
In a market like this, having a plan matters more than ever.
Working with a trusted real estate agent and lender can help you:
- Understand what you can realistically afford at today’s rates
- Review financing options, including ARMs and buyer assistance programs
- Stay informed as market conditions shift
- Make confident decisions based on your goals, not just the headlines
The right professionals can help you look beyond the noise and focus on what makes sense for your specific situation.
Conclusion
Uncertainty in the market does not mean you’re out of options.
If you need or want to move, buying a home may still be the right decision. The key is to go in with a solid plan, the right support, and a clear understanding of your financing options.
Homeownership is still possible. You just need the right strategy for today’s market.
Mortgage Rate Volatility: What You Can Control as a Buyer
Mortgage rates have been moving up and down lately, and that can make buying a home feel harder to plan for. When rates are unpredictable, many buyers wonder whether they should wait, move forward, or try to time the market.
Here’s the good news: while you can’t control where mortgage rates go next, you can control several factors that may help you secure a better rate. The first step is understanding what’s driving today’s market and knowing where to focus your time and effort.
Mortgage Rate Volatility Is Normal
Recent data from Freddie Mac show that mortgage rates have been fluctuating. After trending downward for well over a year, rates ticked up again this month.
That kind of movement can feel frustrating, especially when you’re doing your best to budget for a home purchase. But occasional increases and decreases are a normal part of the mortgage market. Even over the past year, there have been periods when rates jumped before settling back down.
This is another one of those moments, and it helps to keep that in mind.
When there’s economic uncertainty or major global events unfolding, mortgage rates often respond quickly. As Investopedia explains:
“Mortgage rates don’t move in isolation. When global events inject uncertainty into financial markets . . . that can ripple through to borrowing . . . mortgage costs can respond quickly to geopolitical developments. As long as uncertainty remains elevated, rate swings may continue.”
That’s exactly why trying to predict the perfect time to buy usually doesn’t pay off. Rates can change fast, and waiting for the market to cooperate may not give you the outcome you want.
Focus on What You Can Control
You may not be able to influence the market, but you can take steps put yourself in a better position as a buyer. If your goal is to get the best mortgage rate possible, these are the areas that matter most.
Your Credit Score
Your credit score is one of the biggest factors that affects the rate you qualify for. In many cases, even a modest improvement in your score can lead to better loan terms and a lower monthly payment.
As Bankrate explains:
“Your credit score is one of the most important factors lenders consider when you apply for a mortgage. Not just to qualify for the loan itself, but for the conditions: Typically, the higher your score, the lower the interest rates and better terms you’ll qualify for.”
That’s why it’s worth taking steps to strengthen your credit before applying for a mortgage. Paying bills on time, reducing outstanding debt, and avoiding new credit inquiries can all help. If you’re not sure where your score stands or what improvements would make the biggest difference, a trusted loan officer can help you create a plan.
Your Loan Type
The type of mortgage you choose also affects your rate. There are many different types of loans, and each comes with different eligibility requirements, benefits, and pricing.
The Consumer Financial Protection Bureau (CFPB) explains:
“There are several broad categories of mortgage loans, such as conventional, FHA, USDA, and VA loans. Lenders decide which products to offer, and loan types have different eligibility requirements. Rates can be significantly different depending on what loan type you choose.”
This is why exploring your mortgage options is so important. A conventional loan may be the right fit for one buyer, while an FHA, USDA, or VA loan may offer better advantages for another. Comparing programs and speaking with more than one lender can help you understand which path makes the most sense for your financial situation.
Your Loan Term
The length of your loan term matters, too. Most lenders offer 15-year, 20-year, and 30-year mortgage options, and the term you choose can affect both your interest rate and your monthly payment.
Freddie Mac explains it this way:
“When choosing the right home loan for you, it’s important to consider the loan term, which is the length of time it will take you to repay your loan before you fully own your home. Your loan term will affect your interest rate, monthly payment, and the total amount of interest you will pay over the life of the loan.”
A shorter loan term may come with a lower interest rate, but the monthly payment is often higher. A longer term may give you more flexibility in your monthly budget, even if you pay more interest over time. The right choice depends on your goals, your budget, and how long you plan to stay in the home.
Conclusion
If you’re in the market for a home right now, the best strategy is not to focus on trying to predict where mortgage rates will go next.
Instead, focus on what you can control. Improve your credit score, explore different loan types, and choose a loan term that fits your needs. Most importantly, work with a trusted lender who can guide you through your options. If you need help connecting with trustworthy lender, reach out to us today.
Mortgage rates may be out of your hands, but the steps you take to prepare are not. And when you focus on what you can change, you give yourself a much better chance to move forward with confidence.
3 Key Steps for First-Time Home Buyers
Buying your first home is exciting, but it can feel a bit overwhelming. When you’ve never gone through the buying process before, it’s easy to wonder where to start and what to do first.
The good news is that you don’t need to figure out everything out on your own, or all at once. The best approach is to take it all step by step.
If you’re getting ready to buy your first home, here are the three most important steps to focus on first.
1. Build Your Team: Don’t Do It Alone
Buying a home is not a solo project. Having the right professionals on your side can make the entire experience smoother, less stressful, and more successful.
Here are two key people every first-time home buyer should have in place early:
A local real estate agent
A knowledgeable local agent will guide you from your first showing all the way to closing day. They can help you understand the market, explain each step of the process, and make sure you feel confident in the decisions you make.
A trusted lender
A lender will help you explore your mortgage options, estimate your monthly payment, and understand what price range makes sense for your budget. Having that info early helps you shop smarter and avoid unwanted surprises later.
When you have the right team in place, you can find your new home with more clarity and confidence.
2. Prep Your Finances: Build a Strong Foundation
It goes without saying that your finances play a major role in the homebuying process. They affect what you can afford, how competitive your offer may be, and how comfortable you’ll feel once you own the home.
Here are the main financial steps first-time home buyers should take:
Check your credit score
Your credit score can affect the loan programs available to you and the mortgage rate you receive. Checking it early gives you time to improve it if needed.
Save for your down payment and closing costs
Many buyers focus only on the down payment, but closing costs are also an important part of the equation. Saving for both can help reduce last-minute stress.
Research first-time buyer assistance programs
There are programs designed to help first-time home buyers with upfront costs. Depending on where you live and your financial situation, you may qualify for assistance that helps you buy sooner than expected.
Talk to a lender about your mortgage options
Fixed-rate, adjustable-rate, FHA, VA, and conventional loans all work differently. Understanding the pros and cons of each option can help you choose the loan that best fits your needs.
Get pre-approved
A mortgage pre-approval gives you a clearer picture of how much a lender may be willing to lend you. It also helps you set a realistic price range and shows sellers you’re serious when it’s time to make an offer.
Set a realistic monthly budget
Your mortgage payment is only part of the cost of homeownership. You also need to account for utilities, home insurance, maintenance, and everyday living expenses. Setting a realistic budget helps ensure your home feels affordable, not overwhelming.
Being confident in your finances before you start house hunting can help you feel more prepared and better positioned in a competitive market.
3. Gather Your Documents: Save Time and Reduce Stress
Once you’re ready to move forward, your lender will need to verify your income, assets, and financial history. Gathering your documents ahead of time can help speed up the loan process and avoid unnecessary back-and-forth.
Here are some of the most common documents lenders may ask for:
W-2s and tax returns from the past two years
These help verify your income history and show consistency over time.
Recent pay stubs, usually from the last one to two months
These confirm your current income and employment.
Bank statements from the past two to three months
These show your available funds, spending patterns, and where your down payment money is coming from.
Investment account statements from the past two to three months
If investments are part of your financial picture, your lender may want to review them as well.
A copy of your driver’s license
This is used to verify your identity during the loan process.
Your residential history for the past two years
Lenders may request this to confirm your housing background and stability.
Statements for outstanding debts from the past two months
This may include student loans, car loans, and credit cards. These debts help lenders calculate your debt-to-income ratio.
Proof of supplemental income
If you receive bonuses, commissions, freelance income, or child support, you may need documentation to show that income can be counted.
Keep in mind that document requirements and timelines can vary by lender. Still, having these items ready is a smart way to stay organized and avoid potential hiccups.
Conclusion
Buying your first home doesn’t mean you need to have every detail figured out from day one. It just means starting your journey with a plan.
When you gather the right people, prepare your finances, and organize your documentation early, you give yourself a much better chance to buy with confidence.
If you want help understanding any part of the process or are ready to take the first step to homeownership, connect with a trusted real estate agent.
Home Affordability Improved in All 50 States: What Buyers Need To Know
For the past few years, affordability has been one of the biggest reasons buyers have put their home search on hold. Maybe you did the same.
At some point, you may have looked at the numbers, saw what a monthly mortgage payment would be, and decided to wait for the market to become more manageable. But there’s encouraging news you may have missed.
Over the past year, housing affordability has improved in all 50 states. Yes, every single one.
That’s according to new research from First American. And while buying a home is still more expensive than what’s historically normal, the affordability pressure many buyers have felt over the last several years is finally starting to ease.
Some Markets Are Seeing Bigger Improvements
One of the most important things to understand is this isn’t limited to one part of the country or just a few select markets. Affordability is improving almost all over the country.
Of course, real estate is always local. Conditions can vary a lot from one state, city, or neighborhood to the next. But overall, the market is becoming more favorable for buyers. In fact, affordability has improved in 48 of the top 50 metros over the past year.
That same research also highlights the top 10 cities seeing the biggest gains in affordability:
Top 10 Cities Where Home Affordability Has Improved the Most
- Miami, FL
- Atlanta, GA
- Seattle, WA
- Denver, CO
- Pittsburgh, PA
- Tampa, FL
- Salt Lake City, UT
- Riverside, CA
- Raleigh, NC
- Las Vegas, NV
If you’re wondering why some markets are improving faster than others, a lot of it comes down to home inventory.
When there are more homes for sale, the market becomes more balanced. This can help improve affordability by giving buyers more negotiating power. With more options available, buyers may have a better chance of finding a home that fits their budget, and they may also be in a stronger position to ask for seller concessions, price reductions, or closing cost assistance.
That can make a bigger difference than many people expect.
What Does This Mean for Buyers?
Home affordability challenges haven’t disappeared altogether, obviously. Buying a home is still a major financial decision, and housing prices remain high in many markets. But the overall nationwide trend is moving in a direction that gives buyers more opportunity than they’ve had in recent years.
As Chen Zhao, Head of Economic Research at Redfin, explains:
“The housing affordability crisis is showing signs of easing. . . opening the door for more Americans to make the jump to homeownership.”
Conclusion
If you’ve been waiting on the sidelines for affordability to improve, this may be the sign you’ve been hoping for. To find out what’s happening in your local market and how much buying power you may have today, connect with a trusted local real estate agent.
Housing Inventory Is Improving in 2026: What That Means for Buyers
After a long stretch of buyers competing for too few homes, housing inventory is finally improving. Over the past year, more listings have come to market, and depending on where you live, that shift can open up your options in a meaningful way.
According to Realtor.com, the number of homes available for sale in January 2026 was the highest it’s been since 2020. That matters because getting closer to pre-pandemic levels signals a gradual return to a more typical market, where buyers aren’t forced to make rushed decisions with limited choices.
That said, inventory is not back to normal everywhere. And even with growth, more listings alone won’t “fix” affordability or fully rebalance the market overnight. But the changes we’ve seen recently can still have a real impact on how competitive it feels to buy.
When Supply Rises, Buyers Gain Breathing Room
In a low-inventory market, the pressure ramps up fast. Buyers often feel like they have to move immediately, waive protections, or offer well above asking just to stay in the running.
More inventory can reduce that intensity. When there are more homes for sale, buyers typically gain:
- More time to tour homes and think through a decision
- More options across neighborhoods, home styles, and price points
- More leverage to negotiate on price, repairs, closing costs, or timelines
In other words, more listings can shift the experience from stressful to manageable, even if the market still leans competitive in certain areas.
A Growing Share of the Country Is Getting Back to Typical Inventory
Inventory growth is not uniform nationwide. Some markets are seeing a stronger rebound, while others are still tight.
According to Lance Lambert, Co-Founder of ResiClub, in January 2025, just a little over one year ago, only 41 of the 200 largest metros were back to normal inventory-wise.
By around the end of the year, almost half (90) of the largest 200 metro areas were back at or above typical levels. That is a big improvement in roughly a year, and the trend is still moving forward.
Why This Matters for Your Local Home Search
If your area is one of the metros where inventory has returned to typical levels, you may notice:
- More new listings each week
- Fewer “must-bid-now” situations
- More realistic negotiations, especially on homes that sit longer
If your market is still below normal, you may still see multiple offers on well-priced homes. The difference is that, nationally, the direction is improving, and more markets are joining that list over time.
Inventory Is Expected to Keep Growing in 2026
Looking ahead, forecasts suggest the number of homes for sale could rise another 10% this year. If that happens, even more markets should move closer to balanced conditions.
That potential growth could push inventory closer to the levels we saw in 2017–2019 by roughly this fall, which would be a huge milestone for buyers. Of course, reaching something closer to “normal” nationally wouldn’t mean every market feels the same. But, it would increase the odds that more buyers in more markets can find a home without feeling boxed in by a lack of choices.
As Hannah Jones, Senior Economic Research Analyst at Realtor.com, says:
“. . . housing market conditions are gradually rebalancing after several years of extreme seller advantage. Buyers are beginning to see more options and modest negotiating power as inventory improves . . .”
That is the key takeaway: the market is starting to work with buyers again, not against them.
Conclusion
Inventory may not be fully back to normal everywhere, but it’s moving in the right direction. And some markets, it’s already there.
If you have been waiting for a moment when you have more options and a little breathing room, 2026 is shaping up to be the strongest setup buyers have seen in years.
If you want the latest on inventory in your local market, talk to an agent who can break down inventory trends, pricing, and what that means for your next move. And if you’re not sure where to start, you can always reach out to us at CENTURY 21 Affiliated.
The Top Ten 2026 Housing Markets for Buyers and Sellers
Whether you’re buying or selling this year and need to know the top housing markets, you’re in luck. Here are two lists for the 2026 housing market, one for sellers and one for buyers. But before you scroll to the lists, keep this in mind:
If you’re planning a move for 2026, the most important takeaway is this: there are many housing markets to look at this year.
Experts agree 2026 is shaping up to be one of the most geographically split housing markets in years. Some areas are leaning toward sellers, while others are finally opening real doors for buyers. Who has the advantage depends almost entirely on where you live. Selma Hepp, Chief Economist at Cotality, explains it this way:
“Looking ahead to 2026, regional differences will remain pronounced, with demand favoring areas that offer both economic opportunity and relative affordability.”
To show just how divided the landscape is, here’s a look at where sellers may have the upper hand and where first-time buyers may find their opening.
Where Sellers Stand To Win Big in 2026
Zillow identified the following metros as some of the strongest seller markets for 2026, based on buyer demand, pricing momentum, and how quickly homes are expected to sell:
- Hartford, CT
- Buffalo, NY
- New York, NY
- Providence, RI
- San Jose, CA
- Philadelphia, PA
- Boston, MA
- Los Angeles, CA
- Richmond, VA
- Milwaukee, WI
In markets like these, buyers are likely to compete for limited inventory, which can give sellers more leverage.
What sellers can expect in these markets
If you’re a homeowner in a seller-friendly metro, you may see:
- Stronger buyer interest
- Shorter time on market
- Better odds of selling close to (or above) asking price
That doesn’t mean every listing is guaranteed to fly off the shelf. But it does mean sellers who price strategically, prep their home well, and follow a good agent’s guidance can be in a strong position in 2026.
Markets Where There’s More Opportunity for First-Time Buyers
On the other hand, some metros are giving buyers more breathing room, especially first-time buyers who have had the toughest time getting in lately. Realtor.com points to 10 top metros where first-time buyers are expected to enjoy advantages in 2026:
- Rochester, NY
- Harrisburg, PA
- Granite City, IL
- Birmingham, AL
- North Little Rock, AR
- Syracuse, NY
- Baltimore, MD
- St. Louis Park, MN
- Pittsburgh, PA
- Garfield Heights, OH
These housing markets are top contenders thanks to a mix of:
- More affordable home prices
- Better housing availability
- Strong local amenities and economic health
For first-time buyers, that combination matters. It’s often the difference between wishful thinking and a real path to homeownership.
What buyers can expect in these markets
In more buyer-friendly areas, first-time buyers may find:
- Less intense competition
- More room to negotiate
- A clearer path to getting an offer accepted
What Matters More Than Any Top 10 List
Not seeing your city on either list? Don’t worry. This is a snapshot at the national level, not a definitive statement on your local market. These lists simply show how different conditions can be from one metro area to the next.
And remember: you can buy or sell no matter which side your local market favors. All you need is the right strategy for your market’s unique conditions.
Here’s what that can look like:
- Sellers in a more buyer-friendly metro may need to price competitively and focus on strong prep (repairs, staging, and marketing).
- Buyers in a seller-leaning area may still need to come prepared with a clean, compelling offer and a smart plan for competing.
To find out where your market falls and what you should expect, a local expert can help you interpret the trends and build a game plan.
Conclusion
The housing market in 2026 isn’t one-size-fits-all. Local conditions matter more than ever, and knowing whether you’re in a buyer-friendly or seller-friendly area can shape everything from pricing to negotiations.
Whether you’re buying, selling, or just exploring your options, the right strategy (and the right agent) can put you in a strong position this year. If you’re a buyer or seller ready for the next step, search the top housing markets now, or reach out to us for help today.
Renting vs. Buying: Which Home Option Is Right for You?
Between stubborn mortgage rates and rising home prices, you’ve probably mulled over renting vs. buying a home. In market conditions like these, renting and waiting to buy can feel like your only realistic option. This can be the truth in many cases, and buying before you’re ready can be a costly mistake.
But the short-term savings of renting can sometimes trap you in a cycle, preventing you from making wealth-building investments. Over time, this can actually end up costing you more than buying a home early and slowly building equity. Unsurprisingly, a recent survey from Bank of America found that 70% of prospective homebuyers feel renting could hinder their financial future.
Ultimately, the pros and cons of renting and buying come down to your own short-term and long-term financial goals. If you’re feeling torn over whether you should nest or invest, take these major differences into account to decide.
Homeownership Builds Your Wealth Over Time
Apart from giving you your own place to live, homeownership grants the important bonus of building your wealth over time. This is because home prices usually rise as time goes on, meaning waiting longer to buy costs you more. This isn’t always true of every housing market, but the general national trend tends to speak for itself.
The average home sale price has more than tripled in the past 30 years.
Even better, your home equity also grows over time when you’re a homeowner. Equity is the difference between what your home is worth and what you still owe on your mortgage. Your equity grows with each mortgage payment you make, and this builds your net worth over time.
According to the Federal Reserve, the average homeowner’s net worth is nearly 40 times greater than that of a renter. That’s a life-changing difference, and seeing it represented visually really drives the point home.
The average net worth of a homeowner household is almost 40X greater than that of a renter household.
This massive difference in personal wealth is just one of the reasons that Forbes says:
“While renting might seem like [the] less stressful option . . . owning a home is still a cornerstone of the American dream and a proven strategy for building long-term wealth.”
Renting Helps You Save in the Short Term
Compared to homeownership, renting offers lower monthly payments and the freedoms of relatively negligible commitment and responsibility. This often makes renting feel like the safer option, and it usually is, at least in the short term. But in the long term, renting can land you in a trap that prevents you from building real wealth.
Rent tends to rise along with home prices, and this has been true for decades. Rental costs have been somewhat stable recently, but they almost never trend downward. This trap of paying increasing rent without building wealth can make buying a home feel impossible.
Like home prices, rental costs have risen dramatically in the past several years.
Financial uncertainty like this can have a real, lasting impact on any of your financial decisions. In the same Bank of America survey, 72% of potential buyers said they worry rising rent could affect their current and long-term finances.
Rent money doesn’t come back to you, and that means it doesn’t grow your wealth. The only mortgage it’s paying is your landlord’s.
So, whether you’re renting or owning, you’re paying off a mortgage. The question is: whose mortgage do you want to pay?
Renting vs. Buying: What Really Matters
Here’s another way to look at renting vs. buying. Rent money is gone once you pay it. Payments toward your own house build equity, like a savings account you can live in. Obviously, buying comes with higher upfront costs and more long-term responsibility. But the reward is a stable investment that grows over time. And while buying a home often feels out of reach, a solid plan can get you there.
As Realtor.com Senior Economist Joel Berner explains:
“Households working on their budget will find it much easier to continue to rent than to go through the expenses of homeownership. However, they need to consider the equity and generational wealth they can build up by owning a home that they can’t by renting it. In the long run, buying a home may be a better investment even if the short-run costs seem prohibitive.”
Conclusion
Renting may be cheaper in the short term, but it can cost you more over time without building your wealth. If you’re weighing the pros and cons of renting vs. buying, consider your long-term financial goals. Short-term saving can trap you in an endless cycle of renting, but buying without planning can be financially overwhelming.
If you’re ready to make the leap from renting into buying a home, contact us today. We’d be happy to connect you with a local agent who can make your dreams a reality.
Adjustable-Rate Mortgages on the Rise: Should You Jump In?
If you’re in the market for a house, you’re probably not encouraged by today’s mortgage rates. Elevated rates and rising home prices have many homebuyers starting to explore other financing options that make more sense. One type of loan gaining popularity is adjustable-rate mortgages (ARMs).
If you remember the 2008 market crash, you may be wary of new types of loans. It’s wise to be cautious, but there’s no need to worry. Today’s ARMs much safer and stricter than the ones you may remember from 2008.
During that time, some buyers held loans they couldn’t afford once their rate adjusted. Today, lenders are more careful, and determine whether you can afford an increased rate before the loan is ever offered. This time, ARMs are returning thanks to creative buyers looking for affordable ways to buy a home..
According to recent data from the Mortgage Bankers Association (MBA), more buyers are using ARMs to buy this year.
How Does an Adjustable-Rate Mortgage Work?
If you’ve never heard of ARMs before, you may be wondering what they are, and if they’re right for you. Here’s how Business Insider explains the main difference between a traditional fixed-rate mortgage and an adjustable-rate mortgage:
“With a fixed-rate mortgage, your interest rate remains the same for the entire time you have the loan. This keeps your monthly payment the same for years . . . adjustable-rate mortgages work differently. You’ll start off with the same rate for a few years, but after that, your rate can change periodically. This means that if average rates have gone up, your mortgage payment will increase. If they’ve gone down, your payment will decrease.”
Taxes or homeowner’s insurance can still influence a fixed-rate loan, but your baseline mortgage payment typically changes very little. Meanwhile, adjustable-rate mortgages can potentially change drastically in either direction after your initial payment period ends. Depending on your situation and anticipated market trends, this could either work for you, or be far too risky.
Pros and Cons of Adjustable-Rate Mortgages
With ARMs on the rise in 2025, it’s clear that more buyers are finding them appealing. Under the right conditions, they may offer attractive upsides, like a lower initial rate. According to Business Insider again:
“Because ARM rates are typically lower than fixed mortgage rates, they can help buyers find affordability when rates are high. With a lower ARM rate, you can get a smaller monthly payment or afford more house than you could with a fixed-rate loan.”
Remember that if you have an ARM, your rate will change over time. As Barron’s explains, they can potentially cost you more in the long run:
“Adjustable-rate loans offer a lower initial rate, but recalculate after a period. That is a plus for borrowers if rates come down in the future, or if a borrower sells before the fixed period ends, but can lead to higher costs if they hold on to their home and rates go up.”
While the upfront savings can be helpful now, consider what could happen if your initial rate ends before you move. Even though rates are projected to ease a bit over the next couple years, nothing is ever guaranteed. Before you choose an ARM, talk with your lender and financial advisor about all your options, and the potential risks.
Conclusion
For certain buyers, adjustable-rate mortgages can offer some big advantages, but this won’t be true for everyone. Understand how they work and whether their pros and cons make sense for you financially. Always talk to a trusted lender and a financial advisor before making entering into a new mortgage.
Need help connecting with a trustworthy lender in your area? Reach out to us for help today.
