One of the biggest financial decisions you’ll ever make centers around purchasing a home. But there are a lot of things to take into consideration before you can make the decision between buying a home or continuing to rent.
In some local markets, home prices are so low it makes more sense to buy than rent. But it really comes down to your personal and financial situation.
First and foremost, it is important to figure out your finances. This includes figuring out how much you can afford to put toward a down payment and how much you can afford for your monthly payments.
A down payment on a mortgage usually cost between 3.5% and 20% of the selling price of the home. The amount you put down will affect your monthly payments.
When deciding on the amount that you can put toward a monthly payment, it is important to take into consideration existing payments and debts, such as monthly bills, car payments, and loans that you’re paying on when you’re determining your budget.
It’s also important to know your credit score before you consider buying a home. If you have a low credit score, you may not qualify for a home loan so renting may be the way to go, at least until you are able to boost your score by paying off credit cards and forming better spending habits.
Other things to consider when budgeting for buying a home…
Many neighborhoods with homes and condos have maintenance fees-so you need to factor that possibility into your budget.
Make sure you that you are aware of all of the additional costs that come with owning a home by talking to a local real estate agent.
Tax Pro’s and Con’s when buying a home…
Keep it in mind that when you own a home, versus renting one, you have to pay real estate taxes and homeowners insurance. You’ll get a nice tax return at the end of the year because you have to make these payments, but make sure that you can afford to pay the monthly fees leading up to that return. If you rent, you do not have these fees or the tax incentive.
Length of time is a factor…
And finally, determine whether or not you’re ready to settle down for awhile, or if you want to be mobile. If you are still mobile, moving around, or not sure where you want to end up, it doesn’t make financial sense to buy a home right now. However, if you plan to stay in one place for a while (more than 5 years), buying a house will allow you to build equity.
When you are ready to buy a home or need help making that decision, contact Linda Jonard with RE/MAX Affiliates.