To buy or not to buy?

Let’s be honest – we clearly have a bias towards one side of this equation.  However, let us do our best to give you the lowdown for both options.  Buying your first home is a major step.  There is a lot you need to know to make the right decisions – and also to avoid making the wrong ones.  The goal of our blog for this month is to make sure that we provide quality content to help you make an informed buying decision (or non-buying decision).  At the end of the day, we all want to feel good about the transaction with the knowledge that you have made a sound decision for yourself!

Owning Versus Renting

Without question, owning a home comes with responsibilities and risks that you do not have to worry about when you rent, such as a mortgage, taxes, homeowner’s insurance, maintenance and repairs, etc.  However, financial advisors – not to mention homeowners themselves say there are far more advantages to owning:

• The equity argument:  why pay of someone else’s mortgage when you could pay of your own
• The historical argument:  there are peaks and valleys in any market, but over time home values always increase (while your mortgage decreases).
• Tax advantage argument:  this will depend on your circumstance, but there are often tax advantages to owning a home.
• Quality of life argument:  investment in your family’s future.
• Pride of ownership argument:  you get to make a house a home.  Freedom to renovate or decorate how you like, and personalize it. It really is a great feeling!

 Affordability

Do you have enough to buy a home now?  At a minimum, you should have your 5% down payment PLUS enough set aside to cover closing costs (which are usually somewhere between 1.5-2.5% of the total purchase price).  We have worksheets available – just shoot us an email and we can send you one to work through to figure out realistic costs for your home purchase.

Your expenses along with your mortgage payments should not exceed what you are able to afford with your income.  Furthermore, financial institutions will usually suggest that your total housing costs should not exceed 32% of your monthly income.  Once you have accounted for the possible expenses and incidental costs, you can determine what a realistic monthly mortgage payment would be for you.  Can you make these numbers work?  If so, then purchasing may be a realistic decision for you. 

At the end of the day, you are paying a mortgage.  Will it be yours, or someone else’s?