Rent or Buy?
As interest rates continue to rise, many folks are making the transition from renters to buyers. According to real estate resource Freddie Mac, renters should consider transitioning to buyers if they:
- Have reliable income, good credit, and documentation to verify your savings.
- Can afford at least a 3% down payment and related closing costs.
- Want a chance to build equity and be eligible for homeowner tax breaks and credits.
- Have the time and money required for home maintenance and improvement projects.
- Have an adequate cash reserve to withstand a loss of job, illness, or other financial setback.
- Are planning on staying in your home for at least five years.
Still on the sidelines? Home Qualified’s Ralph DiBugnara lists common but often unfunded hesitations cited by potential buyers.
Crash and Burn
Many buyers fear the inevitability of another market crash. However, since the year 2000 real estate has outperformed the stock market 2 to 1. Furthermore, even with the 2007 crash, real estate returns for buyers have held steady at 10%. As with all investments, comfort is key. If you are comfortable with your monthly mortgage payment, becoming a buyer is still a safe bet for long term investment.
Old House, New Problems?
A common fear among potential home owners is that they may not be able to afford the rehab costs that an older home demands. Fortunately, there are many programs that allow buyers to borrow enough to cover both home and construction costs. FHA and Fannie Mae both offer construction coverage. With a little financial planning and a lot of elbow grease, your fixer upper could quickly become your dream home.
Rent Vs. Responsibility
Many renters cite the lack of responsibility as a plus point for renting. However, renting leaves these folks vulnerable to inflation and rising rents. Furthermore, the lack of control when it comes to customizing a rental home is a serious deterrent for those that prefer to nest.
If you want some more tips on becoming a homeowner check out our website and reach out to Home Qualified today.