RENTING OR OWNING

What is Better…

Renting or Owning?

Renting or owning is a question that many of us struggle with. As a Renter we know what our monthly rent and utility costs are and like the feeling of no added maintenance and ease of mobility if we need to relocate. We enjoy the amenities like pools, lounge areas, roof top decks and outdoor grilling options. We like community and special complex events and no maintenance. 

We may also feel that it is easier to get into a rental versus a home for credit, down payment, closing costs and long term maintenance. Many of us also are trying to save for that down payment by working on decreasing our debts, with the ultimate goal of building equity in own property, rather than paying our Landlord’s mortgage. Owning our own home is a dream for many of us, but shifting from renting to owning can be challenging. Let’s look at some barriers to homeownership and discuss how to overcome them. This will help decide if Renting or Owning is best for you!

Some Barriers to Owning….

“I don’t have great credit”

Typically a credit score of 620 or higher is needed to Rent. The minimum Credit Score you would need to qualify for a Federal Housing Administration - FHA Insured Loan is 580! For a Conventional Loan 620 is required. So as you can see it can be the same or even less than what Landlords are looking for.

“I don’t have enough money for a Down payment and Closing Costs”

Saving for the Downpayment and Closing Costs can be tough. Many of us live month-to-month to make ends meet. So how much do we actually need and how can we save?  First, reducing debt is a key first step. The less money you spend on debts means the more money you can save.  Create a budget and reduce extra spending. 

Downpayment…

Different loan programs require different Down payments. VA Loans from 0% down, Conventional Loans as low as 3%, and FHA Insured Loans require 3.5% - Now these can change depending on credit score and debt-to-income ratio. 

There are also financial assistance programs that may be available for qualified buyers (often State-funded programs). Perhaps a parent or direct relative, or even an employer, may provide a financial gift. Remember with renting, we are normally asked to put up first and last month’s rent as well as deposits - so if you can afford to rent, you could also afford to buy!

Always connect with the Lender first to find out all requirements and what type of loan is best for you! The Loan Estimate that they provide will show you all projected costs to purchase.

Closing Costs…

Closing Costs are the various fees associated with getting a home loan.  This may include lender fees, title company fees, appraisal, survey, and even property taxes and hazard insurance. However, Sellers may contribute to these closing costs. Your lender will be able to outline your estimates for financing, to include the Downpayment and closing costs required for your home purchase.

“I carry too much credit card debt”

Let the Lender be the judge of that - share all of your monthly income and debt to determine your Debt to Income ratio for your buying power and mortgage interest rate. Create a Debt reduction plan to not only reduce your high interest loans but to also save more money for your home purchase.

“Prices are too high right now” 

Yes, the Real Estate Market has really changed nationwide over the past year and a half. Rental prices also keep going higher and higher. Even with the higher purchase prices, the monthly mortgage, property taxes and insurance is many times less than what you are currently paying in rent.

“I don’t want the Maintenance of a Home”

As a Renter, you simply call the Landlord or Property Management Company to get things fixed. With home ownership you can always get a Home Warranty Plan to protect you against the high cost of unexpected repairs.

Benefits of Owning…

Opportunity to Build Equity - The longer you own your home and pay down the interest and principle the more equity you will have in your investment.

Stable Monthly payments - Landlords can continually increase your rent. With the Budget Mortgage - Principle and Interest will not change over the life of the loan and Taxes and Insurance will be included all in one payment. Your mortgage payment may actually be less than your rent and you know the mortgage will stay very close to the same over the entire length of the loan.

Low Mortgage Rates - Take advantage of the current low rates for lower monthly mortgage payments. Lower rates equals more buying power.

Tax Deductions- You can deduct monthly interest payments on your mortgage, property taxes and the mortgage insurance. Great benefits at the end of the year! 

Homestead Exemption - You can remove part of your home’s value from taxation to pay lower school taxes.

Add to your Investment Portfolio - Home ownership is a great investment over time and appreciates rather than many other purchases that depreciate like a car.

Pride of Home Ownership - This is yours - paint how you want, move a wall, add a deck or landscaping features. You can have all the pets you want, privacy to entertain

Whatever you choose, do your research and make the decision that is best for you and your family!

“Remember I’m the Key to your Next Home!”

TREC Information About Brokerage Service

TREC Consumer Protection Notice

Wendy Richardson, REALTOR®  

Better Homes and Gardens Gary Greene

12850 Memorial Dr. Ste 1155

Houston, TX, 77024

wendy.richardson@garygreene.com

Mobile: (832) 540-3817

www.wendyrichardson.garygreene.com