How do you want to live?
In today’s economy, your thoughts may be different than they were two years ago. But, should they be? Is buying best? How do you know? Rather than guess, here are some tips to help you decide.
If you decide to rent, you probably know your options. If you’ve decide to buy, you should ask more questions.
For example, how long do you plan to stay in the home? Are you up for a job transfer? How likely is it, in this market, that you could be laid off? To be able to resell your home without losing money, you should be able to stay there at least five years. If you are able to stay 10 years, you should see appreciation that will help build your personal wealth.
How much home can you afford to buy? That is greatly determined by things like how much do you have saved for a down payment? What is your credit score? (The higher your score, the lower your interest rate and, therefore, your monthly payment.) What other expenses do you have – cars, boats, credit cards?
Then you’ll need to be aware of some of the costs of owning a home. What are the property taxes? There will be maintenance costs, insurance costs, possibly homeowner’s dues. If the new home will be larger than where you are now, remember, your utility costs will go up.
One of the biggest reasons for owning a home are the tax benefits you will receive that a renter does not. Owners can realize large tax breaks for property taxes and tax deductions for mortgage interest.
In reality, a home is like any other investment. Over time you hope it will appreciate and be worth more when you sell. Historically, residential real estate has proven to be an asset which appreciates over the long term.
And there is another option. If you can’t buy and you don’t want to rent, lease!
Leasing with an option to buy gives you many of the home ownership benefits including monthly credit from your payments toward paying down the home. You don’t, however, have to qualify up front through a traditional lender. Leasing gives you time to save more of a down payment and to get your credit score higher before you do get a loan.
For more leasing information, check out “What is a Lease Option?”
And for buying information, check out my book, The Essential Handbook for Buying a Home.
Do you plan to buy or to rent?
