To Buy or Not To Buy
Fed up with your roommates? Dreaming of a DIY project your landlord would never allow? Starting a family and need more space? It might be time to take the leap and purchase your first home. But before you commit, ask yourself the following questions.
Can I afford to buy a house?
This will depend on many factors, including your neighborhood, your finances and of course, the current real estate and mortgage market. Getting pre-qualified for a home loan is a great first step to take towards answering this question, giving you a better understanding of how much you’ll be able to borrow to finance a home.
While you may already be saving up for that down payment, don’t forget about the other upfront costs that come with sealing the deal, including closing costs and home inspection.
Can I afford to own a house?
As a renter, you’re most likely accustomed to one monthly rent payment plus some utility bills. If there’s a leaky faucet or malfunctioning appliance, your landlord foots the bill. But when it comes time to move, you may or may not get that security deposit back.
As a homeowner, after the one-time upfront payments, you’ll incur ongoing monthly expenses including your principal and interest, property taxes, homeowner’s insurance, mortgage insurance (if your down payment is less than 20% of the home’s purchase price), HOA dues (if you’ve purchased a condo or apartment) and all utility bills. In addition to those recurring payments, you’ll be responsible for repairs and renovations – both planned and unforeseen – and general maintenance. It’s no secret that home buying costs a lot more upfront than renting, however you can get some (potentially even more) of that money back when you sell your home.
What are my future plans?
The virtues of buying grow when you stay in your home for a while, building up equity and value over time. If you foresee yourself moving in the next few years – for love, a new job, better weather, etc. – the flexibility of renting may be a better option for you at this time.
Ultimately there’s no right answer to the question “Should I rent or buy?” Both have pros and cons and the right choice for you will depend on your unique situation. Whatever you decide, First Tech is here to help, from saving for your goals to navigating the homebuying process.