Making the decision to purchase a house is often intimidating. It is a long-term commitment to live in the same neighborhood, send your kids to the same schools, work in the same area and shop at the same stores. Plus, the news is filled with reports about the instability of the housing market and the economy in general, so many people are scared to jump into a large financial commitment like a mortgage. However, with interest rates at an all time low and fantastic bargains on beautiful homes across the country, there has never been a better time to buy a home instead of renting.
Renting a home is like throwing your money away every month. You are simply serving to make your landlord wealthy. A mortgage payment and a rent payment might seem like the same thing in your monthly budget. Unlike rent, only the mortgage payment will eventually give you money back when you go to sell your home.
Even if a mortgage payment is substantially more than what you are currently paying in rent each month, it is still worth taking the plunge and buying a house if you can afford it. Your home will earn equity and build your credit rating. A rental property will just improve the financial status of the person that owns it.
All the negative economic news has likely got you nervous about buying a home. You are worried that you won’t be able to get approved for a home loan when you find the home you want. It is true that economic circumstances have prompted increasingly rigorous lending standards being implemented by banks across the county.
That being said, banks are still granting loans, and plenty of people are still buying houses. The best way to find out if you qualify for a home loan is to go to a lender and get prequalified. Prequalification lets you determine how large of a loan you can afford. That way, when you start shopping around for a house, you will know exactly what fits into your price range.
Be sure your estimated monthly mortgage payment, homeowners’ insurance and property taxes fit comfortably into your monthly budget. Leave enough money from every paycheck to start and add to a savings account, college accounts and retirement funds. The biggest mistake made by home buyers in the past few years was buying houses that accounted for too much of their earnings. Buy a modest house that allows you to have money left over so that you are able to live comfortably and save for the future.
Thankfully, home prices and low interest rates are combining to create a favorable economic climate for renters to successfully make the transition to home ownership. Interest rates will likely never be this low again, spurred on by the government’s efforts to stimulate the economy. Home prices have fallen in the majority of areas across the country, which benefits prospective buyers tremendously.
However, some potential buyers are currently sitting around waiting for home prices to fall even farther before they make their move to buy. This is not a good plan. We will likely only know the bottom of the housing market when we see it in the rearview mirror. There is no way to know when home prices will begin to rise again. If you see a good house that fits your budget, odds are someone else is looking at that home, too. Make your move and place a bid. Don’t miss out on a great deal in the name of negligible savings.
There are many advantages to buying a home. You will build credit, home equity and create a stable future for yourself and your family. Renting a home simply throws your money away. With today’s great interest rates and good value on homes, it is a great time to make the jump from tenant to home owner.
Kevin Curtis is a licensed agent with RE/MAX Advantage Plus. He is The Minnesota Real Estate Team’s 2007 Agent of the Year. Kevin and his team provide great service and ongoing insights into the Minnesota Real Estate market at
MinnesotaPropertiesOnline.com.
[tags]Buy a home, rent a home[/tags]
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