Articles and Advice
First-time Buyers - Should You Buy a Home or Renew Your Lease
Is it time to renew your lease or buy your first home?
It's a question every renter faces at some point, and the right answer for you depends on a number of important factors.
Choosing the right time to buy your first home makes a world of difference because preparation is crucial. If your finances are in order and you're ready for homeownership, deciding to buy your first house can be an exciting, rewarding decision. Let's take a look at factors that will help you decide whether to renew your lease or become a homeowner.
How Do You Decide?
- Are you prepared financially to buy a house?
This is the big question because even if everything else is in order you will still need solid finances in order to buy your first home. There are programs available to help first-time buyers qualify for loans. FHA loans may allow you to secure a loan with a down payment as low as 3.5 percent. Consider whether you have the savings to make a down payment, the steady income to pay your mortgage, and cash for the other costs like moving, furniture, and property taxes. - How's your credit score looking?
Your credit score is a big factor in your ability to qualify for a mortgage with favorable terms. You don't need perfect credit to buy a house, but you'll want to make sure that any outstanding debts or other credit issues are addressed before applying for a mortgage. - Have you chosen a location that fits your needs long-term?
Shopping for the right neighborhood is often just as important as shopping for the right house. It helps to have a solid idea of where you'd like to live as you enter the housing market. Consider your employment needs, preferred entertainment options, family needs, school district, and anything else that is important to you in the community where you want to live. - Are you ready on a personal level to own a home?
For many renters, the decision to go from leasing to owning coincides with personal milestones like starting a family or finding a career with long-term financial security. Unfortunately, there is no equation to help you decide if you're ready to buy; however, if you feel like now is the time and your finances are ready, you'll be prepared to approach purchasing your first home with confidence. - Are you willing to compromise to get what you need?
No matter how many homes you buy, there are always compromises involved. Are you willing to live on a budget to have the cash you need for mortgage payments and home expenses? Have you prioritized wants/needs when it comes to your desired home and neighborhood? Answering these questions will help you decide if now is the time.
There are financial and personal benchmarks that can help you decide whether the time is right to buy a home. Owning a home is rewarding in so many ways, from being able to customize your home to your heart's content, to the equity you can build by owning a home of your own.
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