Deciding whether to rent or buy is a big decision. While there are many advantages to owning your home versus renting, there are also many factors that come into play when making the final choice to buy rather than rent.
Benefits Of Owning A Home
Besides the pride of homeownership, there are many perks to owning a home:
- You’ll have no restrictions from a landlord. Your house is your own, you have the flexibility to live with limited constraints!
- You may receive tax benefits, so consult with your tax professional. You can deduct the interest from your mortgage loan and your property tax from your income tax!
- You’re investing in something tangible. The mortgage payment you make each month goes toward something that you could eventually own free and clear that could even increase in value! Every rent check you write is money you will never see again.
- You’ll have more stable housing costs. Rent typically increases from year to year, but with a fixed-rate mortgage your monthly principle and interest payment will remain the same.
Understanding The Start-Up Costs
There are some important initial costs to be aware of when purchasing a home, including:
- Down Payment: This is the upfront investment you make in your home. Depending on the particulars of your situation, you may be able to put down as little as 3%!
- Closing Costs: These include attorney fees, settlement fees, title insurance, recording fees, appraisal fees and other costs to close the loan.
- Home Appraisal: This is a professional analysis of what the property is worth.
- Home Inspection: You may want a detailed report on the structural and mechanical soundness of your home.
- Moving Costs: The price it costs to move varies depending on the distance you’re moving, how much you have to move and if you hire movers.
Ongoing Costs of Owning
In addition to the start up costs, there are many ongoing costs that come along with owning a home:
- Mortgage Payment: Your monthly mortgage payment will depend on the price of your home, your down payment and the loan program you choose. Your Loan Originator will help you find an amount you’re comfortable with.
- Taxes and Insurance: Property taxes can vary by city, county and state. Homeowners insurance is also a mandatory cost of owning your home and can vary depending on the location and value of the home.
- Homeowners Association Dues: These dues cover maintenance costs for the neighborhood.
- Other costs to consider: Lawn Maintenance, Home Repairs, and Utilities.
Understanding Your Credit Score
Having your credit checked is an important part of the mortgage loan approval process. Lenders will use your credit score to determine if you are likely to pay back your loan, so it is crucial to make sure you have good credit when making the choice to purchase a home. You are able to review your credit report for free annually at www.annualcreditreport.com.
Being Financially Ready
Now that you understand the Start-Up and Ongoing Costs of buying a home and you have a good idea of your credit score, you need to take some time to consider if you are financially ready for homeownership. The Blue Skye team is always ready to answer any of your home buying questions, so feel free to contact us!