Buy while rates are low or wait?
A quick guide to help you decide
Buying a home may be the biggest financial decision most of us will ever make.
Take a Free Homebuyer Education Class which will help you make an educated decision.
In some cases you may qualify for a down payment assistance program.
Sit down with a Realtor and ask about the process.
Surveys of renters suggest that most do plan to buy. But now or later is the question. Rules (primarily to do with no pets) and the inability to decorate to choice ranking high on the list of reasons.
There are many on line calculators and programs that will compare pure numbers to show you what you should do. However the decision to buy is extremely personal and computer programs should not be your deciding factor. The biggest challenge on deciding is to be realistic. Weighing the “numbers” Vs the emotional side of renting or buying, for some people is important. Here are some other items to consider before you sign a lease or a deed:
1 Home Price.Obviously this is important but as mentioned not the only factor. Some subsets of price are:
2 how long do you plan to stay in the home. Buying tends to favor renting the longer you stay because the upfront costs are spread over many years.
3. What are your mortgage details? In addition to the interest rate and down payment, you need to factor in the mortgage interest tax deduction
What does the future hold? If you knew the answer to this the decision would be easy, How much future prices increase, how the stock market does, even the price of gas can affect your numbers. Rents can go up during inflation. Fixed rate martgages stay the same over the life of the loan.If you choose to rent, we assume that you’ll spend your would be down payment on stocks or other investments.
Taxes are always a factor, both in buying or renting. Property taxes and mortgage interest costs are significant, but also deductible. The higher your tax bracket is the bigger the deduction can be. You filing status can also be an important variable.
An often-missed consideration is closing costs. You have to pay various fees both when you buy and sell a home. Making sure you find a lender who will outline these fees upfront can help you make a more accurate decision.
Maintenance and Fees. Owing a home comes with a surprising variety of expenses that renters do not directly pay. Insurance, upkeep and replacement of worn or broken items can quickly cost more than expected. A good rule of thumb is to put aside 10% of your yearly payment to cover these sometimes-unexpected outlays.
Additional Renters Costs. There are other costs to rent beside your monthly rent. Renters also need content insurance to cover them in case of fire, flood. 1-2 months security deposit may be required. A brokers fee to help you find a place may typically cost $150-200 Most rentals do not include a garage or other storage. You may have to pay extra to store all of your possessions for the time you are there.
If you are in a job that requires flexibility on location, the emotional feeling that you do not have “skin in the game” might be of consideration to you. Being able to move fairly quickly is a plus to renting. Putting down roots, finding a good school, church, good neighbors, friends are more important in some people’s decision.
If you must use an on line calculator I recommend the website michaelbluejay.com. The numbers to input are a lot, but it does cover most of the important aspects to consider.
No matter what the decision is for you-the right time is now. Don’t put off moving into the place that is right for you.
Chooseahomenow and rxforhomebuyers consultants can help you make your choice.
Real Estate has always been a sound investment.
By: Sue Maclary