To Rent or Buy?
To rent or to buy - It’s an age old debate and as with many things in life, the decision boils down to two major factors: timing and finances. Before you jump into home ownership, be sure to ask yourself the following questions.
What is your credit score?
A good credit score (between 620 and 850) will get you the best mortgage rates on your loan. Having a lower credit score will make it much more difficult to get approved for a loan, and if you do get approved, expect to pay much higher monthly rates. To prepare for home buying, you can improve your score by making your monthly payments on time, paying off significant purchases, and avoiding taking on any new debt (like financing on a new car).
Do you have enough savings for the down payment?
It is recommended to have savings of up to 20% for the down payment to keep your monthly payments manageable and to avoid any additional insurance charges each month.
Can you manage the monthly mortgage rates?
You might think of your monthly payments in terms of the rent that you pay today. But keep in mind, mortgage payments include the loan payment, plus property taxes and insurance. And depending on the mortgage option you choose (fixed or adjustable), your payments can change depending on interest rates.
What are the current market conditions?
Although it's impossible to predict every market trend, there are a few factors to keep in mind, including mortgage rates and property values. A buyer’s market will result in a wider range of properties to choose from and less competition to get your dream home.
How stable is your job?
Job security is a super important factor when determining whether you should buy a home or wait. If you’re planning on putting in your 2 week notice anytime soon, then it’s probably best to stick with renting for now.
How long are you planning on staying put?
If you absolutely love your neighborhood and are planning on living in your area for awhile, then buying a home is probably the right move to make. In many cases, if you’re staying put for at least four years, you’re more likely to break even if you eventually decide to sell the home.
How handy are you?
The truth is being a homeowner is a lot of work. Most of your spare time will be spent on unexpected repairs, routine maintenance, and decorating to make the house feel like a home. Unless you have the money to drop on a move-in ready home, chances are you’re going to have some home improvement projects to take on. And if you don’t feel entirely comfortable with your DIY skills, be prepared to pay for a professional to do the work for you.
There are plenty of advantages and disadvantages to both renting and buying, so don’t be discouraged if one choice fits your current life situation over the other. If you stay on top of current market trends and are honest with yourself about your personal finances and goals, you’re sure to reach a decision that gives you a place to call your own. When you are ready to buy a home, head on over to our Buy a Home page to view listings in your area.