Figures released by the National Association of Realtors confirm something you may have suspected but never knew for sure. America is a nation of homeowners and would-be homeowners. Every month, there are thousands of consumers who buy a home for the first time. In February, out of the total nationwide home sales, 28% were to first time home buyers.
Clearly, owning your own home makes a lot of sense. Nevertheless, there are some factors to consider before deciding that now’s the time to take the plunge.
Before taking that big step from renter to homeowner, examine if it actually makes sense to stop renting and start owning. There are many variables that suggest renting rather than owning might be more cost effective. But with the fluctuations in the property market lately, the factors have once again swung toward ownership.
The Costs: Rent vs Mortgage
Standpoints include the almost historically low interest rates, contributing to affordable monthly mortgage payments. By comparison, renting has become more expensive because tougher mortgage constraints have made the housing market less accessible.
It’s still probable that mortgage payments, including taxes and insurance, will be more than your current rent. But even if the monthly payment is lower, you must consider other costs too.
A Three Dimensional Asset
A home is an asset, needing maintenance and upkeep from its owner. Organize for this eventuality from the beginning by setting up a “home” account to fund repairs and pay into it monthly.
The Insurance Story
Homeowners insurance comes with more options, exclusions and deductibles than renters insurance. Policies vary according to the types of damage covered and the monetary benefit the owner would receive if the home is destroyed.
You don’t need to concern yourself with mortgage insurance unless you have health insurance issues. Don’t get tied into a bimonthly payment plan, when you can make additional principal payments anytime your budget allows
Financing Your Home
Financing your first home can be tricky. Lenders want good credit scores, stable employment and a big down payment. It’s the down payment that can be a problem for first-time buyers so have a look at the FHA. Lenders are more lenient. Credit scores can be a little lower and buyers can put as little as 3.5% down. For more information, go online for the FHA’s loan requirements.