If you’re close to the end of your lease and wondering if now is a good time to buy, the short answer is yes. Most experts agree that even with higher interest rates and increased home prices, buying a home is a good investment. Being able to build equity and have a consistent monthly payment are some of the big benefits of homeownership.
Here are a few things to consider if you’re ready to break up with your landlord.
- Rent prices are projected to continue to increase, but your mortgage payment will remain the same
- Over time you’ll grow equity in your home, meaning you’ll see a return on your investment that you won’t get with renting
- While interest rates are high, they are projected to continue to rise so you’ll benefit from locking in a rate sooner than later
But that doesn’t mean it is the right decision for everyone. While the pro’s typically outweigh the cons when it comes to homeownership, that doesn’t mean it’s the right decision for everyone. Owning a home is a big financial decision. Before taking the leap, do a financial checkup to make sure you are financially ready.
Here are a few questions to ask yourself.
- Can you afford the monthly payment?
- Do you have enough saved up for the down payment and closing costs?
- Do you have an emergency fund to cover potential home repairs?
- Can you commit to staying in the home for at least 3-5 years?
- Do you have a good credit score?
OTHER FAQS
Q: How much money do I need to save for closing costs and a down payment?
A: Closing costs are typically 3-6% of your loan amount. A downpayment of 20% is ideal, but most lenders don’t require the full amount and can help you find down payment assistance if needed.
Q: Why is it important to commit to a house for at least 3-5 years?
A: In general, it takes about 3-5 years to recoup the costs of purchasing a home, including things like closing costs and mortgage fees. The actual number of years until you break even is dependent on how quickly home values rise in your area.
Q: I can’t afford my forever home. Should I keep renting instead of buying?
A: Holding out for your forever home isn’t always the best financial decision. If you buy a house you can afford now, you can save – and grow – money over time. Then when you’re ready, you can use the equity you’ve built to help fund your next home.
HAVE MORE QUESTIONS?
Give us a call. We can connect you with financial experts who can help you make a decision that is right for you. Then when you’re ready to start your home ownership journey, we’ll be ready to guide you every step of the way!
