March 7th, 2016
When pondering the options of renting or buying there are many things one needs to consider. Both have their pros and cons and one may be more suitable for someone than the other. One basic thing to think about is that when you buy a home you are planting your roots. It may be wise to think about buying if you are planning on staying put for 2 years or more.
Buying a home comes with much more responsibility; however, it can also be a cheaper option in the long run. A rent check may feel like throwing money away for some, but taking on a lot of mortgage debt may be something that others just cannot handle. One writer for Redfin Corporation believes that there are 5 things one should look at when scanning their options of renting or buying:
- Get your credit in check – Before you even get the thought of owning a home you need to make sure that your credit is in line or else banks will not want to give you a mortgage. Also make sure that your debt-to-income ratio is in check because this is the second thing the banks will be looking at (To determine your ratio, add up all your monthly debts, including car, student loan and credit card expenses and the potential mortgage payment, and divide it by your gross monthly income).
- Budget, then shop – Shopping before you get your budget in line can lead to real disappointment. Often times first time buyers will find a place they love and then realize that it just is not in your price range. Usually a good real estate agent won’t give you the run around with houses that you just simply cannot afford. Apply for a loan now!
- Inspections should not be taken lightly – Inspecting a home before moving in compared to a rental property is different in many ways. With a rental unit you are checking basic things like appliances, light switches, garage doors, etc. Now when you are making the long-term commitment of buying, it’s up to you and your home inspector to spot everything from mold to leaks. When you are having the inspection make sure to accompany the inspector and ask a lot of questions. A thorough process may take a few hours! Get an inspection today!
- Factor in the extra costs – When looking at home prices many searching buyers strictly look at the cost of the home. These buyers are overlooking one large factor; property taxes. If your property taxes are part of your monthly payment you need to be aware that they may raise your monthly rate. Another additional cost is going to be homeowner’s insurance. If you are taking out a loan, homeowner’s insurance is mandatory. Talk with a lender to better understand the extra costs you may be running in to.
- Repairs are all yours – Anything that goes wrong is now your responsibility. This may be the biggest difference between renting and owning a home. No longer do you call your maintenance person and ask them to come fix any problem you have. You are now responsible for finding a repair man and paying the bills.
All in all, switching from renting to buying a home is a big decision and one that needs to be thought about methodically. Making sure you are ready for the move and that it’s the right thing for YOU.
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Vasel, Kathryn. “Should I Buy a Home While Still Paying Student Loans?” Web. 16 Feb. 2016.
Redfin, Blogger. “Going from Renting to Buying a Home.” Redfin. Redfin, 9 June 2014. Web.