Thinking about whether to keep renting or buy a house? You’re not alone! The idea of owning your place can be really appealing. You can make changes, have more control, and build equity with every payment. But before you leap, let’s look at some important things to consider.
5 Key Things to Think About
Everyone’s journey to homeownership is different. If you’re thinking about making the switch from renting to buying, here are some pointers to help you decide if you’re ready or if you should keep renting a bit longer.
1. Upfront Costs Can Be Higher When Buying
Buying a home usually costs more upfront than renting. While renting often just requires a security deposit, buying involves a down payment of around 3.5% of the home price for first-time buyers. You’ll also have closing costs, so funds are needed for that. Don’t forget to talk to your lender and real estate agent about upfront or out-of-pocket costs such as the home inspection and bank appraisal.
If your down payment is less than 20%, you may have to pay for private mortgage insurance (PMI), which protects the lender if you don’t make your payments. This can add an extra cost each month.
Having a good credit score helps a lot! Most lenders look for a score of at least 620, but for better interest rates, aim higher. If you’re carrying student loans or other debts, your debt-to-income ratio is important too. So, if you have some debt, focus on paying it down!
2. Buying Often Means Compromise
When you start looking for houses, you might find that your dream home is out of your budget. Many buyers want what I call the “bells and whistles”, such as stainless steel appliances, luxury vinyl flooring, and an updated newer look. Be willing to compromise if you find a great home if you can replace these cosmetic items later. Also, some people don’t want to cut grass or deal with certain maintenance issues, so a condo may be what you need.
Remember, it’s common to make adjustments to your expectations based on your price range.
3. More Surprises with Homeownership
Renters usually don’t have to deal with maintenance issues. If something breaks, your landlord takes care of it! But as a homeowner, if the fridge stops working or the roof leaks, that falls on you. This can be stressful!
Being ready for these surprises both financially and emotionally is really important. Have a plan for how to handle unexpected repairs or costs. There are home warranty plans that cover services for electrical, HVAC/AC, plumbing and other items and/or appliances, depending on which one you choose. Contact me for a list of local home warranty services.
4. Mortgages Can Sometimes Be Cheaper Than Rent
In some cases, you might find that your mortgage payment is lower than your current rent. And even if it’s not, remember that every monthly mortgage payment is helping you build equity in your home instead of just paying your landlord.
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As life changes, your housing needs may change too. If you’re thinking of starting a family, you might want more space or a yard. Pets can also be a challenge when renting, as not all landlords allow them or they may charge a pet fee or pet rent.
5. Your Lifestyle Might Lean Towards Buying
If you love DIY projects, you’ll have much more freedom to personalize your space as a homeowner, since most landlords won’t allow major renovations.
Should You Keep Renting or Buy a House?
In the end, deciding between renting and buying is all about your personal situation. Think about your finances, where you want to live, and your lifestyle needs. If you have questions about the homebuying process or need help, feel free to contact me! I’m here to help you explore your options and find the best path for you.
