Renting vs Buying
There are two main options you can choose from when it comes to putting a roof over your head, renting, or buying. The two choices have both pros and cons, so it can sometimes depend on the situation you are in to determine if you are ready to purchase a home or consider renting from someone else. Here are 3 things you should study to see if it is the right time for you to purchase a home:
Check the Market
One of the most popular sayings when it comes to home buying is that renting is a waste of your time and money. This may be true in some cases, but if the market is turning upside down, just the opposite is true. The definition of an upside down market is, “when a home owner owes more on the home mortgage than what the home is currently worth”. If you notice that housing prices are rising quickly and they are several thousand dollars more than what they were worth a year ago, you may want to hold off on purchasing a home. Chances are that these prices will come back down once the market settles, which could leave you in a lot of trouble. Buying a home in this type of market may leave you trapped in the home or not getting much profit, or any profit at all, when you try to sell it.
Check your bank account
Buying a home can be one of the most exciting things you do for yourself, but it can be just as stressful if you don’t have enough money in the bank account. One of the biggest mistakes people make is comparing the price of a mortgage to the price of rent. Almost always, the monthly price of the mortgage will be lower than rent. This doesn’t mean that you can afford to be a homeowner though. You need to consider everything you will have to pay for before and at closing (estimated to currently be around $5,000-$6,000), and then you also need to make sure you are always ready to repair or replace something in the home. As a renter, you don’t have to pay for the refrigerator if it breaks, but if you own the home, you may have to spend a pretty penny out of the blue to purchase a new one. A wise thing for people to have in their bank accounts before purchasing a home is have $1,000 saved up for emergency expenses, and then an extra 3-6 months of living expenses. If you don’t have this kind of money saved up, you may not be ready to buy a home yet.
Check your lifestyle
Another important aspect to consider before purchasing or renting a home is your lifestyle. How long will you be living at this home that you are wanting to buy? Is this the state and/or city that you want to live in forever? If you are planning on moving away somewhat soon after you purchase it, are you planning on using it as a rental property investment. If you are not convinced that you want to stay in the city or state for a long time, you may want to rent out a home. By the time you pay for closing costs, repairs, and more, it may be cheaper to just rent for a year or two instead of going through the hassle of trying to sell in a couple years. If you know you are going to be in this home for a long time, possibly even forever, then it is most likely a better idea for you to buy instead of rent if you have the right finances.
Considering these three areas of your life should help you decide if you’re ready to purchase a home or find a rental for a couple years. If you are ready to buy a home and are looking to see what best fits you and your budget, come in to your local Gulf Winds branch today and get pre-approved for your mortgage!