Buying a home is a part of the American dream but, the idea of starter homes is being replaced with a dream home where you’ll live for 30 years. Whether you decide to rent or buy, the key to look at the big picture and your individual situation to determine what’s best. Here at DEXSTA, we have some financial tips and important questions to ask yourself before making any decisions.
Do You Love Where You Live?
Your intended length of stay will help you decide if it makes sense to rent or buy. The longer you hold onto your house, the more time you have to spread out the costs of the house purchase. Also, if you sell within a few years, the value of your house probably won’t appreciate enough to offset the costs. When you take on a mortgage, it usually runs for 30 years, and that is a loan you have to pay back. So, if you are planning to stay in the area for less than five years, buying a house would be a questionable financial decision because you will absorb the closing costs and pay capital gains taxes on the sale if you sell it before your two years mark.
Want to learn financial tips about mortgages? Here’s our blog: Mortgage 101.
Are You Throwing Away Your Money?
When you just focus on the monthly mortgage payment vs. monthly rent, you might be overlooking the hidden costs of ownership — look at the whole picture. Property taxes, insurance, and regular maintenance all rack up the monthly bill. Also, if something breaks you have to fix it or pay someone to fix it, which can be unexpected costs.
Have You Saved Enough?
The cost of buying and maintaining a home is a considerable expense. A traditional down payment is 20% of the home’s price. Think of it this way, if you are looking at a house priced at $290,000, a 20% down payment is $58,000 which is a cost you would pay all at once. Now, you don’t have to put down 20%, but a financial tip is the more substantial down payment you make, the more financially secure you appear to lenders. This is a benefit because you’ll get a lower interest rate on your mortgage, so you’ll have a lower monthly payment. Other costs to consider are home repairs, property taxes, yard upkeep, homeowners insurance and utility bills.
There are so many financial tips and questions to consider when considering if buying is right for you. Make sure to look at your finances and your future goals. Sometimes renting until you find your forever home is the way to go. Here at DEXSTA, we look forward to helping our members. You can contact us online, by phone, or walk into one of our branches.