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Buy a Home Or Rent? What to Do in This Economy

If you are in the position of being a first time home buyer in this economy, you may be stuck in a quandary. With a depressed real estate market, is it better to rent or own a home? Before you make this important choice, there are a few factors you should consider. After going over these points, you should be in a better position to make this life changing decision.

The biggest issue for most people when it comes to making the decision to rent or buy is the costs involved. You should look first at the current local real estate prices and use a mortgage calculator to figure out how much you can expect to pay for a home. Look at the rental listings and take note of how much rentals are currently going for. Use websites like Realtor.com or Craigslist.com to keep tabs on the current prices. You may also want to consider getting pre-approved for a mortgage loan to figure out your exact APR and price range.

Even if your potential mortgage payment price is lower than a rental monthly payment, you need to keep a few factors in mind. First, as a homeowner, you will be responsible for your water and garbage payment each month (something that most landlords take care of). This can total between $100 and $200 per month. In addition, there are several other costs involved with buying a home including closing costs and fees for the realtors. You will also have homeowner’s insurance to take care of and various maintenance costs involved (like caring for the lawn) that many new home owners don’t consider.

The true cost of your mortgage can also be affected by the type of mortgage loan that you get. A fixed rate APR loan is preferable if the interest rates are low because the amount of your loan payment will never change. However, an adjustable APR loan will fluctuate with time. If interest rates are high, you may have lower payments when they go down. But on the flip side, your payments will increase when the rates go up as well.

If the rental cost is cheaper, you need to take into account that rental prices increase from time to time, sometimes as often as once a year. Even if you have a good rate now, you may be paying several hundred dollars more in the coming years as your landlord increases your rate. In addition, as a homeowner you can use the equity in your home to consolidate bills or complete home improvement projects. Your mortgage payments actually pay you back but your rental payments are lost forever.

In some cases, it might make more sense to rent. If you are in the area only temporarily or you’re not sure what part of town you want to live in, renting a home or a condo can make a lot of sense. Financially speaking, even with the extra costs, the ability to build equity makes buying a superior choice, even in this economy.

Buy a Home Or Rent? What to Do in This Economy

Buy a Home Or Rent? What to Do in This Economy

loan rates for home improvement – Reno

Last Updated on July 11, 2022

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