Buying Versus Renting; Clearing Up Age-Old Misconceptions

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If you’ve been following the real estate market lately chances are you know that things are improving. We’re seeing a lot more sales in our marketplace and compared to last year the numbers have hiked as much as nearly 14% in Alabama. In fact, 64% of our local market is reporting an increase over the previous year!

But when it comes down to your own situation and whether you ought to buy or rent a home, there is more to it than just sales figures. The reason now is a great time to buy centers on our current real estate environment. For the first time in years, buyers are enjoying unprecedented low home prices. When you combine that with historically low interest rates, it is a winning formula for an excellent return on your investment. Not to mention the added quality of life you get from owning your own home.

One of the reasons renters are wary of buying is the misconception that they will have to give up flexibility. In reality, if a homeowner needs to move to another location, the property can easily be rented and managed by a property manager, while gaining equity and increasing in value.

Here are four questions I suggest you ask yourself when contemplating buying or selling; keep in mind that the answers to these questions will dispel much of the typical misconceptions most people have about one choice over the other.

Why Do You Want to Own Your Own Home?

The answer for most people goes beyond just being the “king of the castle” or “ruler of the land”. In fact, owning one’s own home offers a lot of freedom and flexibility. Homeowners are able to customize their space to suit their needs. They can remodel, renovate, decorate, enhance, paint or do almost anything else they want to the property – without the need to get approval from a landlord. A common fear of prospective homebuyers is the seemingly daunting task of home maintenance and repairs. The truth is that aside from the major issues, smaller things are easily manageable if you set up a small fund to cover those repairs. All other major issues are usually covered by insurance.

Is Now The Best Time To Buy?

The answer is a resounding YES! If the prospect of owning your own property is exciting to you, if you are already paying a certain amount each month for housing and you want to be able to enjoy the freedom of your own space – what’s stopping you? In fact, when all other factors line up, you’ll find the market itself is ideal for homebuyers. With interest rates that have never ever been this low, very affordable home prices and favorable market conditions, there couldn’t be a better time to buy. Many people don’t realize that in 98% of American real estate markets it is more cost-effective to buy than to rent right now.

Does It Cost More Money to Buy Than It Does to Rent a Home?

It does cost more to buy than to rent, but not much more. In fact, there is even a way to get around the little extra costs of a traditional home sale. When you consider the fact that rented homes usually require the first and last month’s rent in advance plus a security deposit – the amount quickly adds up to about the same or just a little less than it would cost to put 3% down on a home. Further, sellers often provide concessions where the buyer is relieved of some of the purchase costs at hand. And another way to get around a larger amount of cash up front is to negotiate some of the costs into your financing.

How Does Buying Affect My Finances?

Assuming you qualify for a loan, having a mortgage is a positive thing for your credit outlook. It is one of the strongest ways to demonstrate financial viability for buyers with less than perfect credit. After contacting a local mortgage broker, you will find out the maximum loan amount you qualify for based on your income, debt and other factors. It’s important to keep your budget in mind in terms of what you can afford monthly, regardless of the preapproved loan amount. As long as you remain within your budget the financial impact is positive. In fact, in as little as 8 to 10 years the value of a home typically increases significantly – giving you a solid return on your investment.

If you’d like to explore the options out there for you right now, contact us today for a customized consultation where we look at your specific real estate goals and needs. We look forward to helping make your dream of owning your own home – a reality!

1 comment:

  1. These sounds to be quite an interesting video in regards to apartments and condos in the city.