Are you currently renting a home and wondering if you should consider throwing in the rental towel and jumping on the buying train so you can start paying down a mortgage rather than paying for someone else’s home? The answer isn’t always a simple one as the decision to either rent or buy does come down to a few essential considerations. Here are a few things to consider that might help you make the important decision whether you will rent or buy.
1. What is Your Credit Health?
When you are looking to buy a home, it’s a whole other ball game to renting as you will need to ensure your credit health is in amazing condition and you don’t have any issues with your income, employment stability or previous marks on your credit history. The screening process for buying a home can be pretty intense so be sure that you do credit review before you start the house buying process to ensure that if you need to get all your credit ducks in a row, so you look great on paper during the home loan application process.
2. How Much Cash Do You Have?
Now is the time to focus on figuring out how much you can afford for your home loan should you go ahead with this process. You have to consider that you will need to have cash in the bank and savings to afford to buy a home and the deposits you’ll need to kick off the home loan process. You will also need fees for appraisals, home inspections, insurance and closing costs. Usually having 5% to 10% of the home cost is ideal to have in cash at the bank.
3. How Long Do You Plan to Live in the House?
Ask yourself, are you planning on staying put in the home for a few years or are you better off renting so you can your hard earned cash and purchase a home when you are ready to put down some roots or invest for the long term? The other issue to consider is if you buy a home and then need to move towns and sell the home you need to ensure your home earns the correct amount of equity to make the purchase worthwhile.
4. Are You Ready for Ownership?
Have you ever thought about whether you want to be a homeowner or are you comfortable renting off someone else, so you never need to take responsibility for a property? Many are keen to buy a home, make improvements and renovations and build equity, while others are just not that keen on getting a mortgage and being attached like a ball and chain to a home loan for 25 years or more. Don’t forget when you buy a home you’ll need to ensure you carry out maintenance and renovations as you live in the home and pay for rates, utilities and insurance for the home as well.
5. How Is Your Current Housing Market?
Once you have considered all the other important elements outlined above now, it’s important to consider whether the housing market is in good shape to invest in a home. If the market is in bad shape there isn’t much point buying at the wrong time so be sure to approach home ownership when it’s a buyer market or when there is a massive supply of available home so you can get the best price and value for money.