HOMEOWNERSHIP... an attainable milestone
Owning a home is a major milestone many Americans expect to achieve in their lifetime. It’s not simply about staying in one place – it includes the financial security to make a major investment and see it grow over time.
Bryce & Ashley Taylor spent all four of their college years at Utah State University living in off-campus rental apartments. With graduation now behind them and a family in their future plans, they knew one thing for sure. “If we liked Cache Valley enough to live here a few more years, we were committed to the area and emotionally ready to buy our first home,” Bryce said.
The Taylor’s crunched the numbers and found that a mortgage payment would be pretty close to paying rent. Once they saw the math, taking the leap was easy. What also enticed Bryce & Ashley: the investment value. “Rather than pay over $1,000 to a landlord, I liked the idea of paying that money to ‘future us.'”
The National Association of REALTORS® recently released a report about home affordability and how, despite media headlines, homeownership is more affordable than ever. Historically, the choice between renting or buying a home has been a tough decision, and driven largely by the percentage of income needed to rent vs. buy a median-priced home. Today, the choice is obvious… as 28.4% of income is needed to afford the median RENT while only 17.5% of income is needed to afford a median-priced HOME.
WHY RENTERS LOOK TO HOMEOWNERSHIP
A survey of Renters show that 74% plan to buy in the next 5 years, while 38% plan to buy in the next 2. What’s driving them to the housing market?
RISING RENTAL RATES
Rents are rising at a fast pace, resulting in 52% of Renters looking to purchase a home in order to take back control of their monthly expenses.
MAKING THEIR LANDLORD RICH
49% of Renters feel their landlord receives all the benefit, while they’re left without a tax deduction or any earned equity for their future.
WANT TO FEEL “AT HOME”
The ability to paint walls, remodel, even have a pet is something 43% of renters want to help make their place feel like “home.”
Every market is different. Before you renew your lease, meet with a local REALTOR® and find out if you can put your housing costs to work for you. With a little research & help from a professional, you may find that owning a home is more affordable than renting!
ARE YOU READY TO BECOME A HOMEOWNER?
Your dream of owning a home is a greater possibility now than at almost any other time in American history. Listening to the naysayers could only prove to be more costly the longer you wait. With a little research and the assistance of a REALTOR®, you may find that owning a home today is more affordable than renting. Here’s a few steps to get you started…
RUN A CREDIT REPORT… Which is free to do, once per year and doesn’t affect your credit by visiting Annual Credit Report. You’ll receive a report from each of the three major credit report agencies and see if there are any areas in which you may need to work on. Do you have outstanding balances you can work to pay off? Did you miss a payment on a student loan a couple years back? Neither are cause for you not to qualify for a mortgage, but the smaller the balance or the more time that passes from the last credit blemish the less likely a lender to consider a red flag.
WHAT CAN YOU AFFORD… How good your finances look from a lender’s perspective isn’t the only thing to consider. What loan programs are available in your area and at what interest rate? You should also look at savings that can be used toward a down payment (if needed) and determine how much you’d be able to afford (and like to spend) on a monthly basis for your principal mortgage payment, interest, taxes and insurance. A good recommendation is 30% of your gross income, which most can borrow and sustain long-term.
SAVINGS FOR OWNER EXPENSES… Being a homeowner means that you’ll be responsible for home maintenance and other potential costs that may come up. Be sure you have either savings set aside or a small monthly budget for repairs and upkeep, whether for small do-it-yourself things like replacing floodlight bulbs or the inevitably serious issues that crop up from time to time (sure, the water heater works fine today, but everything has a life span). The costs of homeownership is bearable – people pay them everyday – as long as you know what’s coming and are prepared.
CONSULT WITH A REALTOR®… Once you’ve examined your finances it’s time to start talking to a professional who will be able to help you throughout the process of buying a home. A natural start is with a local REALTOR®. They will be the advisor you can trust, connecting you with a loan officer, title representative, home inspector and other faces that will be apart of your home purchase. During one of the largest financial purchases you’ll make, you’ll feel confident knowing you have a professional in your corner who will make it a pleasant experience.