Is Now the Time to BUY a Home?

Renting vs. Buying a Home:  Tough Choice??

It’s absolutely amazing how low house prices are!  Some areas in the U.S. are still settling, but in Minnesota you can buy a great house at terrific prices.  Add to this the lowest Interest Rates in 30 years and you have a total win-win situation!  People who don't own a home should be thinking about buying instead of renting. Here are a few points to consider:

Why Rent?

Freedom: Things happen, that’s life!  If you need to find less-expensive housing or move to a different location, Renters won't have to worry about the risk of selling a home for less money than they paid for it or try to do a short sale if they owe more than the value. This situation of owing more than your home is worth could occur if there were an over-supply of housing on the market. If you are already planning to move in just a few years, renting is often a better choice financially. Even if the value of your home goes up during that short time period, the costs associated with buying and selling in such a short time frame would likely exceed your profits.

Up-front costs: Renting may be the best option if you don't have the cash reserves needed for a down payment and for closing costs on a mortgage, or if you cannot get a gift from Family, or qualify for any Down Payment Assistance.  For Renters, the initial payout is a month or two of rent as a security deposit. Compared to the amount homebuyers need for down payment, closing costs and Mortgage Insurance if not putting down 20%.

Major Maintenance: As a Renter, you're unlikely to be responsible for replacing a leaking roof or a broken furnace.  Landlords usually take care of the repairs or replacements on appliances and repairs on the home.

Monthly Costs: Rental expenses usually will be less than what a homeowner would pay each month in "PITI/MI" (principal and interest, property taxes and homeowner's insurance, and mortgage insurance).   If you rent, you should purchase renter's insurance, which is likely to be less costly than homeowner's insurance for a comparable property.

Why Buy?

Right:  One of the best things we have in America is the opportunity and right to own your own home.  Not all Buyers will qualify immediately.  Some may need to enroll in my Path2Buy Program (see previous 11/01/2011 Blog Article:”Think you can’t Buy a home?” ) in order to help them on the way to being qualified Buyers.

Wealth creation: By paying your mortgage each month on time, over many years, you will likely build up equity (the current value of the home minus what you owe on your loan).  These funds can be used for a down payment for your next home or for some other purpose, such as retirement. If you live in your home long enough to pay off the mortgage, you will have a valuable asset to sell or leave to a family member.

By Renting, after 30 years of paying rent, you will have nothing to show for it in terms of a home that will serve as your nest egg or inheritance to your family. 

If you pay off your mortgage, you'll also have one fewer payment to worry about each month (you will still have to pay for real estate taxes, insurance, repairs and any homeowner or condominium association fees).

Emotional satisfaction: Home Owners can put down roots in a community they
like. Owning a house can be satisfying in itself.  This is my home, my land, my property. Always a great feeling to say that!

Stability: Landlords can raise rents when your Lease comes due.  If you buy a home with a fixed-rate mortgage, your monthly principle/interest payment won't change for 30 years, 15 years, or however long you have that mortgage. 
Be aware that your property taxes, home owners insurance and association dues could still go up.  You can always pay off your Mortgage as fast as you like.

Want to Buy a home?  You will need to be a Pre-Approved Buyer, this makes it easier for Real Estate Agents to know you are actually qualified to buy, and for the Sellers to know you are a serious, qualified Buyer.  Call me today to see what you can qualify for.

Steven Goldman

Waterstone Mortgage

763.746.9921 direct

763.202.8145 office

www.StevenGoldmanLoans.com

SGoldman@WaterstoneMortgage.com