For many renters, owning a home is the ultimate goal. But it’s not always easy to know if that’s the right move for you.
If you’re stuck between renting or owning, here are a few tips to help you make your decision:
- Evaluate your finances. Owning a home is serious business. You’ll need a stable income, a solid credit score, and enough cash for a down payment – which may be as much as 20% of the price of the home. Plus, plenty of resources left over for your emergency fund and regular expenses.
If you’re missing one or more of those pieces, now might not be the right time to buy.
- Consider, are you ready to put down roots? Buying a home is a ton of work – and you’ll be hit with a number of larger one-time expenses. You’ll want to stay put for at least a few years to spread out those costs and increase the value of your home.
If you plan on moving to a new city within the next three years, renting is probably the better option for you.
- Compare rental and house prices in your area. Buying a home and building equity is undoubtedly a good investment. But in some areas, monthly rent may be much lower than mortgage payments for similar properties – making renting the better value.
Before you jump into homeownership, do some thorough research to determine which option gets you the most bang for your buck.
- Evaluate interest rates. When shopping for a home, rates should be a consideration because the higher the rate, the higher your monthly mortgage payment.
There’s good news with mortgage rates, even if you’re not happy with the current outlook. Historically, they tend to move up and down - and once the market is more stable, you can consider a refinance to bring down your rate and your monthly payment. Experts say if rates are at least 1.00% lower than your original rate it might be time to think about a refinance.
- Listen to your gut. Buying a home is about more than the money. It’s important to ask yourself – are you ready for the responsibilities of homeownership? Remember that in a rental apartment, plumbing issues, a leaky roof, and similar issues are typically fixed by the property manager. In your own home, that’s all up to you.
If you’re still not sure, CoreFirst Bank offers free online calculators to help you decide whether renting or buying is the right option for you. Visit the CoreFirstBank.com resource center here.