Buying a home is a huge financial commitment, but according to the results of the latest Rent vs. Buy Report from Trulia, homeownership can still be a better deal than paying rent. The report states that in the 100 largest metro areas in the United States, homeownership remains cheaper than renting with a traditional 30-year fixed rate mortgage. So, is it the right time for you to own a home? Here are 3 questions to consider!
Does it make sense to buy?
You already know what you pay for rent, so to estimate how this compares with the cost of a mortgage, you will need to evaluate a few pieces of information – the price range for the type of house you want to buy, the amount you’ve saved for a down payment, and your likely mortgage interest rate. Once you have an idea of how much your potential home might cost, you can subtract your down payment savings from that total to find out how much you need to borrow to buy a house. Then, calculate the cost of a mortgage loan on the remaining amount to come up with an estimate of your monthly mortgage payments. To simplify this process, there are plenty of online rent/buy calculators that can help you to weigh your options.
Are you financially ready?
Buying a house involves saving a down payment and paying a monthly mortgage. The down payment is simply a lump sum that is paid upfront that funds equity in the property. Your mortgage payment is the monthly cost that includes the loan principal and interest. Other costs are affiliated with the homebuying process including homeowners insurance, home inspection fees, and closing costs.
Are you emotionally ready?
Owning a home is a huge commitment so you should consider if you are ready for the big decisions such as picking the right neighborhood. Also, are you ready to devote a lot of time and attention to maintaining a home? Keep in mind, a home requires regular maintenance and repair, and there’s no landlord to call for help.
The Bottom Line
For many, buying a home makes sense financially. If you are one of the many renters out there who would like to evaluate your ability to buy this year, contact one of our Loan Officers at ALCOVA Mortgage today to learn more!