Should You Rent or Buy At This Point
Are you trying to decide whether you should rent or buy a home at this point in time?
If you are, you have probably heard that buying is the always the best way to go.
While buying is often the right choice, there are times when buying a home may not be your best option.
You should consider your own personal situation to help you decide which path (renting or buying) is right for you.
Review Your Credit Rating
While your credit rating may be taken into consideration regardless of whether you rent or buy,
a poor credit score will be detrimental in an attempt to purchase a home. A well-regarded Realtor in Sarasota Florida, Judie Berger, who specializes in Sarasota luxury homes
says that generally, a credit score of less than 675 will result in a high mortgage interest rate if a lender will lend to you at all. So,
if you have poor credit, it will probably be better for you to rent a home until you can bring your FICA credit
score up substantially. By doing this, you will save money on the amount of interest you will pay on your home mortgage
You may also avoid the embarrassment of being turned out outright and that refusal will remain on your =credit report for some time.
Your Debt Ratio
If you are carrying a significant amount of debt such as student loans, credit card debt, an auto loan, etc., you may not qualify for a mortgage loan. Ideally, your amount of your total monthly debt payments should be no more than, and hopefully less than
36% of your gross monthly income. If it anything much more than that, you are unlikely to be approved for a mortgage at all
It would be a better plan to focus your attention on renting as inexpensively as you can while paying down your
debt before you consider purchasing a home.
If your plans include moving within the next 3 to 5 years, purchasing a home probably is not a good
idea. While no one can predict the future, you should consider your family, your lifestyle and your job as you try
to determine the likelihood of your moving in the near future. If there is a good chance of being transferred to a
different city within the next 3 to 5 years, it might be in your best interest to rent.
Remember, the value of your property needs to appreciate by at least 10% in order to cover the cost of having bought and sold i unless your employer guarantees to reimburse you for any such costs
"Otherwise," says Bob Henley, a well-known realtor, "you will
likely lose money having bought a home and then selling it again in such a short period of time."
"The longer you live in the home, he says, "the more it will appreciate before you sell it."
The Cost of Maintenance and Repairs
When you buy a home it is important to remember that you are accepting all of the responsibilities of
home ownership. In addition to utility bills and property taxes, you will be responsible for taking care of routine
maintenance and repairs. Whether you are a skilled "do it yourselfer" or not, the cost of maintenance and repairs can add up
quickly. Of course, for many people, the pride of home ownership and the ability to personalize the home make the cost
worthwhile. Remember also that you will probably have to buy some things you don't need when you are renting like a lawn mower, etc.
Consider the Longer Term as Well
On the other hand, purchasing a home is an investment and few things more satisfying than knowing you are making out those checks
for something you will ultimately own rather than paying off your landlord's mortgage for him..
Therefore, it is important to remember the long-term as well as the short-term when deciding between
renting or buying a home.
If you're thinking about buying a home, you should do all the research you can and then sit down with a
competent Realtor to discuss your options further regarding neighborhoods, schools and all the other things that, if you do decide to buy, will affect
what and where you buy a home.