Owning a home goes beyond the mortgage payment, and renting beyond your monthly rent check. If you’re tossing up your options as a potential homeowner, here are some things to think about before you make the jump into home ownership–monthly payment aside.
Rent vs buy: which options is right for you?
1. What are your long term goals?
Buying a home is a long-term commitment. Your job, age, family, and long-term goals should be taken into consideration. If you move frequently for work, it may be difficult to sell or rent out your home.
On the other hand, if you have school-aged children and love your school system, or you plan on staying in your area for years to come, buying a home might make better financial sense.
Weigh out your long term goals when making the rent vs buy decision. It’s important to consider the whole picture, even if it’s only to get a rough idea of where you want to be in the next 10, 20, or 30 years.
2. Are you prepared for home maintenance?
When you rent, your landlord or apartment complex covers repairs and maintenance at no charge to you. When you become a homeowner, however, these things suddenly become your responsibility. Even if you’re handy around this house, unexpected repairs and regular maintenance can be costly.
If you’re not quite sure if you’re ready to take on a complete home maintenance plan, consider purchasing a condo instead of a home. You’ll have to pay a condo association fee, but those fees cover a lot of the maintenance that homeowners would have to pay; things like roofing, siding, gutters, and masonry.
However, most COAs do not cover things like windows, HVAC or plumbing, or electrical work. Be sure to check with your COA or HOA before you purchase a condo to see what the fees cover and what would be expected of you as a homeowner in the community.
3. Do you want payment stability?
Buying a home offers a certain amount of stability that rent doesn’t provide, so when considering rent vs buy a home, it is important to take that under consideration.. As a general rule, your mortgage payment stays the same every month unless you refinance, in which case it usually decreases.
Renting does not offer the same stability. Once your lease is up, you can almost be sure your rent will increase if you renew. Since 2010, the average price to rent has increased 14 percent–even more in areas with hot rental markets.
4. Would you like tax breaks?
Homeowners are offered certain tax breaks that renters aren’t privy to. Many expenses related to your home, from mortgage insurance to certain upgrades, offer significant tax advantages. This is one consideration in rent vs buy that always results in a win for buying. Owning a home offers tax incentives that renting does not–plain and simple.
5. Credit score and finances
Your credit score and current financial situation affect your ability to both own a home and rent. If you’re renting because you don’t think you can afford a home, you might be surprised to learn that many mortgage options exist. For example, an FHA loan requires just 3.5 percent down and a minimum median credit score of just 580, making home ownership much more attainable even for those with less than perfect credit.
Think you might be ready?
When it comes to thinking of the old rent vs buy a home, it is important to consider the big picture. If you think you might be ready to take the plunge into home ownership, call one of NLC Loans’ personal mortgage advisors toll-free today at 1-877-480-8050. They can help you learn more about the options available to you and help you finance the home of your dreams.