Should you Rent or Buy; Which is Best?
The majority of Americans either live in a house with a mortgage or an apartment with a monthly rent. Each option has its benefits and drawbacks, yet many people who rent think owning a home is out of their reach. That’s not always the case. In fact, people who rent are often surprised to find that they’re in the minority – around 69% of Americans are homeowners. Don’t buy in to the myths and fears surrounding homeownership, get the facts and see for yourself how the American Dream is still very much alive and available.
Homeownership is too expensive. You need to have a large down payment, as much as 20%, to qualify for a mortgage.
20% is not the golden rule. Banks will approve mortgages with a smaller down payment, although you’ll likely have to tack on mortgage insurance which will slightly raise your monthly payments. Certain loans, like FHA and USDA loans, can be obtained with as little as 3% or no money down. You may qualify for a down payment assistance program, especially if you’re a first time homebuyer – check with your loan officer for more information about local and state programs.
I need almost perfect credit to qualify for a loan.
There are some minimum credit score requirements for different types of loans, but the limit is less than ‘perfect’. For example, FHA recently changed their minimum credit score to 580. Your credit score is just one component that a lender reviews when assessing your eligibility for loans.
Now is a bad time to buy a home.
Mortgage rates may have risen slightly in the recent past, but when compared to rates from the last ten years, now is actually one of the better times to buy. Rates will continue to slowly climb, so it’s important you act quickly to take advantage of these levels. And if you’re worried about rates dropping in the future, don’t be – you can always consider refinancing your home to lower your payments, if the conditions are right.
The mortgage process is too complicated and risky.
Nobody, except maybe a banker, goes through this process by themselves. Just like you’ll use an experienced, knowledgeable agent to help you find your new home, you’ll seek professional advice from a loan officer to help you find the right mortgage.
In terms of risk: yes, owning and paying down a mortgage comes with certain risks. But, renting produces its own financial risks, some of which are more severe than the alternative. For one, when you rent, you’re paying down your landlord’s mortgage, not your own. A cornerstone benefit of homeownership is financial security. Paying into your own mortgage builds equity that you own and can use later; you could pay rent for five, ten, or more years and get nothing back but a paltry security deposit.
Rent or a mortgage is usually the single biggest expense for an individual or family – when it comes down to it, one can disappear and the other will not.
Financial benefits are only one advantage of homeownership. Having the freedom to make modifications, set your own rules, and mow your own lawn is rewarding and fulfilling. Zito Realty Group has helped hundreds of people find their new home, if you’re ready to become the King or Queen of your domain, contact us for a free consultation session.