Have you been considering making the move from renting to buying a home but you’re not sure if you’re ready? Many people wonder whether or not it’s time to move onto buying a home. Generally, it’s more cost-efficient in the long run to buy than rent, but there’s a few questions you should consider before you do purchase a home. After all, there’s some surprising benefits to renting that shouldn’t be overlooked.
1. Do you plan to move often?
Do you tend to move frequently? Whether it’s because of your career or you simply like exploring new places every few years, this is important to consider as moving frequently is difficult when you buy a home. Consider the fact that every time you buy a home, you’re also paying closing costs, moving costs, and home inspection costs.
This means you’ll have to ensure your home goes up in value significantly for you to break even or make money on the sale. If you move frequently, renting might be the best option for you.
2. Can you afford a large down payment?
When you’re planning to buy a home, naturally, you need to save a large down payment. When you’re planning to rent a home, you only have to pay first and last month’s rent. If you can afford a large down payment, that’s great, but make sure you consider other costs, such as closing costs, which often add up to between 1.5% and 4% of the home’s total purchase price.
In addition, you’ll want to consider maintenance and repairs once you own the home. As a homeowner, you’ll need to pay for anything that goes wrong whereas as a tenant, you won’t need to worry.
3. Have you considered the costs above and beyond the mortgage payment?
When people think of buying a home, they often think of paying the mortgage payment each month without considering much else. You might pay $1000 in rent per month, but that doesn’t mean you can afford a $1000 mortgage payment. Why not? The answer is simple... the cost will often work out to approximately 40% higher than your mortgage payment.
What does that mean? Essentially, you’ll need to add various extras, such as insurance, property taxes, and maintenance and repairs. This is important to keep in mind as you’ll want to budget appropriately.
4. Will the bank lend you enough for the home you’d like?
If you have a dream home in mind or even a price range in mind, it’s time to think about what the bank will actually lend you. You might think you can afford a large mortgage, but it’s important to ensure your expectations are in line with your credit union or bank’s lending guidelines. They typically allow you to spend up to 32% of your income on your mortgage payment.
Keep in mind, they will consider your debt payments too, which cannot exceed 40% of your gross household income. If the bank will lend you enough for the price range you have in mind, that’s great but always err on the side of caution. You don’t want to sign up for a mortgage you won’t be able to afford down the road.
What’s the Verdict When It Comes to Renting vs. Buying a Home…
Renting is a good option for those who move frequently, prefer to spend a predictable amount per month, and can’t afford a large down-payment. But if you’re looking to buy because you know where you want to live for the foreseeable future and you’ve prepared for the costs of homeownership, it’s time to look at buying a home! Homeownership can be a fantastic investment that allows you to build equity, which doesn’t happen when you choose to rent. You’re a great candidate for buying a home if...
Ready to look at homes for sale in Ashville Park Virginia Beach? Or maybe you’re more interested in the beautiful neighborhood of Alanton Virginia Beach? Check out our community page to find information on all sorts of communities to consider in Hampton Roads. The benefits of owning a home are extensive compared to renting, especially if you’re a great candidate already:
Plus, when you make mortgage payments, a portion of that payment is going towards paying the loan down. This gives you more equity in the home, and overall, allows you to eventually own the home outright – never making those monthly payments again. If you’re ready to buy a home, make sure you check out our post on 4 reasons you need a real estate agent.
Ready to buy a home? Click here to contact us, give us a call at 757-350-1149 or send us an email at firstname.lastname@example.org to start planning your next move now! I’m here to answer any questions you may have about your real estate goals.