Renting vs. owning a home is undoubtedly a contentious topic, but there’s no denying that it’s significant choice for many individuals. Some claim that renting amounts to simply paying off someone else’ smortgage, which is equivalent to flushing money down the drain. Others say that they could never give up their freedom and settle down in one spot.
How do you know when it’s the right time to become a homeowner if you’re finally considering doing so this year? Renting vs. buying is a significant and expensive decision, but you can always support your choice with reason and feeling. We’ve listed seven indicators that you’re prepared to move from being a renter to a homeowner to assist you in your situation.
1. Your monthly rent payments are rising.
One of the main reasons a renter might desire to own a property is the fact that rents are always rising in
many regions of the nation. A single-family home’s average monthly mortgage is higher than the cost of
renting in various neighborhoods and real estate markets. If you already feel imprisoned by the erratic
nature of your rent payments, you might do better to buy a house where the mortgage is steady and you
can gradually build equity in your most valuable possession.
2. You have a reliable job.
Employment is crucial to the mortgage application process because lenders and mortgage firms consider
your employment history when deciding whether to approve you for a loan. They usually want to see that
you’ve worked for the same employer or in a related industry for at least two years, and that you’ll
probably continue to have the money to pay your debt. Your tax returns, and other documentation must
demonstrate that you have had a consistent source of income for at least two years if you are a freelancer
or gig economy employee. Just keep in mind that a stable employment translates into a stable income for
lenders, which reduces your risk as a borrower.
3. You have money set aside to cover the down payment, closing charges, and other expenses related to home ownership.
According to the 2019 NAR Profile of Home Buyers and Sellers, saving for a down payment is often the
most challenging phase in the home buying process. Student loans and credit card bills make it more
difficult for people to save money for a down payment on their dream home. Therefore, you have a higher
chance of saving up enough extra cash to pay the additional costs of homeownership if you’ve had a stable
work for a time and your income has increased.
4. You’re keeping tabs on your debt.
When you apply for a mortgage, you are not required to be completely debt-free. Lenders merely need
to be certain that you don’t have excessive debt relative to your income and that you’ll be able to afford
to take on more responsibilities, such as your projected monthly mortgage payment.
5. Your credit rating is in good standing.
Renters’ low credit scores are one of the main obstacles keeping them from becoming homeowners. The
amount of money you may borrow and the interest rate you’ll pay depend on your credit score, so having
good credit is important.
6. You’re all set to make a home in the area you adore.
The location of your choice and your capacity to settle down in one area are two very important factors
to take into account when purchasing your first home, but this one is quite personal. Renting is probably
your best option because you can leave whenever you want. This is especially true if you know you’ll move
in a few years, know you’ll just stay in a particular location for a year or two, or simply couldn’t picture
yourself being tied down in one spot.
7. Finally, you’re prepared to acquire a home.
Above all else, it’s important that you’re ready to buy a property. All costs associated with repairs, upkeep,
and maintenance fall under your control when you own a property.
You’ll know you’re ready to name a place your home when the thought of house maintenance no longer
bothers you, you genuinely like fixing up your place, and you’re willing to remain over the weekends
merely to take care of yard work and mow the lawn. You understand that being a homeowner and acting
as your own landlord means a great deal of responsibility.