Is it time to say goodbye to the rental life? Investing in your own home, rather than renting, can be a big decision to make. Homeownership can be a gratifying investment in your own financial security and personal wealth. And if you are a renter, you’ve probably felt the sting of writing a check each month towards someone else’s financial investment.
For people interested in becoming first time homebuyers, determining when it’s truly better to buy than rent is an important first step.
Rent vs Buy: How do you choose?
Rent prices are zooming upwards all over the country. Low inventory and increased demand for rentals is leading landlords to increase rents, and this trend is expected to continue. A recent rental market report issued by Rent.com estimates rental rates to increase by 8% next year.
The current state of the rental market means good news for landlords who own rental properties, but not for the renters who are forking over large amounts of their income in rental payments every month. Increasing numbers of renters are spending as much as half of their income every month on rent payments, leaving little behind to pay off debt, or save for a home of their own.
Home purchase prices are also on the rise, but not at the same rate as rental prices. The home value increases predicted next year by the National Association of Home Builders are similar to the 4.5% growth that was seen this year. Home values have increased steadily over the past four years, and forecasters continue to expect rising values.
For some renters, the choice is clear. Rental prices and home prices are both rising. However, rental rates are rising higher and faster than home prices, making purchasing a home the best financial decision for them.
National averages on home and rental prices don’t always paint a complete picture. In some areas, such as the Bay Area and other California coastal areas, home prices are growing faster than wages.
Potential homebuyers need to carefully consider their local housing market before making a decision, comparing the price of rent to the sales price of homes in their own neighborhood. You can use a Rent vs Buy tool to help you examine your specific local housing market.
Can I Qualify to Buy a Home?
If the market is signaling that it is the right time to buy a home, but you are wondering if you can qualify for a home purchase loan, there is good news.
There are variety of home loan programs available for first time buyers. If you work with a mortgage loan advisor, you can see the options available to you. Some loan programs may accommodate unique situations, even if you:
- Recently changed jobs, or became self-employed.
- Don’t have cash saved for a down payment.
- Want to use gift funds for a down payment.
- Need more lenient guidelines for a lower credit score.
Working with a personal mortgage loan adviser is a good way to see what loan programs are available, and which program and interest rate you qualify for.
Rental prices are increasing every day. The longer you rent, the more time and money you spend investing in someone else’s financial future. The good news is, you can start investing in your own financial future now. If your local market is experiencing affordable home pricing, rising home values, and you qualify for one of today’s competitive rates, then it is time to seriously talk with a knowledgeable home loan advisor. Your time to buy could be now.