For most potential homebuyers, the debate of when to move from renting to owning is one of the hardest decisions outside FINDING their actual new home. Investing in the purchase of a new home is a big commitment, both on the financial and time scale. But, rent in major metropolitan areas continues to rise putting pressure on those looking to make financial investments that make sense for their personal situation.
Here are a few questions we recommend asking as you consider renting vs. buying:
- What’s the rent situation in your area? If you live in a major metropolitan area, there is a risk that rents will continue to rise year-over-year and price you out financially.
- What is your financial situation? Your financial and credit situation doesn’t have to be perfect, especially if you are a first-time homebuyer. But just like other major financial situations, it’s important to see if there are areas to improve (i.e. paying down debt from credit cards or student loans) that will weigh on your finances as you rent or buy.
- How long are you going to stay? If you are planning to stay in the same region and you can see yourself moving into a home for five to seven years, buying could be an option to consider.
- What’s the cost of homeownership? When you purchase a home, the cost of ownership and repair are all on your shoulders. That means you have to factor in future repair costs, especially if you purchase a house that needs a little TLC.
The New York Times has a page dedicated to most of these questions and it can help you get an overview of where you may stand based on the current market in your region. At Evergreen Home Loans, we also have a rent vs. buy calculator to help with your decision making.
But, a calculator can’t tell you everything. Potential buyers considering making the switch from renting to buying should engage an experienced home loans professional who can ask the right questions about financial status and future plans. This will give potential buyers a cost-benefit analysis they can use to determine if they are going to keep renting or start looking for that dream home.
Our team of home loans professionals are likely in your local community and we’d love to talk to you about your financial and homeownership goals. Find your local branch here!