Renting Vs. Buying a Home: How to Decide
The decision to rent or buy a home is never an easy one. For a long time renter, buying a home can look like a big, scary commitment. To make a decision, most renters find they must evaluate their situation, reach out to professionals, budget and take a look at the current market. After doing research and some soul searching, some renters will decide to buy, others will decide to keep on renting. These tips can help potential buyers decide which option is right for them.
Ask Yourself Questions
The difference between renting and buying can be big. Renters don't make repairs and they are able to move any time they want (subject to their lease). Many renters find that they must ask themselves questions to assess whether or not they're ready to buy a home. Below are some of the most revealing questions that a renter can ask themselves.
- Am I prepared for home maintenance?
Homeowners do spend time and money with basic home repairs. Repairs and home maintenance take time and money, and not everyone has these resources. It's estimated that homeowners spend around 1% of their home's purchase price per year on annual maintenance.
- Am I financially secure enough to own a home?
Potential Arvada CO home buyers must sit down and budget their money before they can answer this question. In addition to money for maintenance, home buyers must also have money for the down payment, as well as property taxes, homeowners insurance and a monthly mortgage payment.
- Do I have money for a down payment?
Unless the home buyer is getting a USDA loan or a VA loan, they will most likely need the funds for a down payment when buying a home. Down payments range between 3.5% and 20% of the cost of a home. In addition, there can be additional closing costs, in addition to the down payment.
- Am I committed to my location?
Some renters decide to stay renters because they're not sure how long they will remain in their current location. Some people find it's much easier to move when renting than when buying.
Preview Some Homes
Another excellent way for a renter to decide if buying a home is right for them is to go out and see some homes that are available to buy. A renter who falls in love with big yards, open spaces and the privacy of a single family home may be ready to buy a property. A renter who feels no personal attachment to single family residences even after seeing homes in person is probably not ready yet to buy.
Reach Out to Lenders
Getting a mortgage can be a challenge for some renters. There's a lot of paperwork involved, and the renter must have good credit. Some people question whether they can get a mortgage at all, while others wonder if they can afford a mortgage to buy the home they want. The best way to find out is by contacting a lender. Renters who are not sure if they'll be able to qualify for a mortgage should contact a mortgage lender to get clarity.
Talk to a Real Estate Agent
The best way to decide whether or not buying or renting is right for you is to talk to a professional real estate agent about home buying and the real estate market in your area. Your real estate agent can help you weigh the pros and cons of buying a home, and can also help you decide what type of home is right for you.