What property types should you consider when buying a home? Here are some key factors to understand when making your decision!
Should you consider renting or buying your next property? Both options have their advantages, but the right choice for you will depend on your specific situation. Some people are in a great position to buy, while others might find they are better off renting. Here are some factors to consider when making this type of housing decision!
When to consider renting
There are many reasons people choose to rent instead of buy. Here are just some examples of situations where renting is the best move for you.
You are unsure where to settle
Someone who buys a property should be prepared to settle into that home for a long time. Mortgage terms, down payments, and closing costs are major expenses. These are not costs you should take on if you don’t see yourself living in the same location long-term. It takes a long time to save a down payment, which you cannot get back if you move. Breaking your mortgage term can also be very costly. Plus, the time and effort involved with buying a home must be considered. If you aren’t certain about where you want to be, it’s better to rent in the meantime. Rental agreements typically only last for one year before you can renew or exit the contract without penalty. Renting has a much shorter time commitment, which is the best bet for someone who doesn’t know where they want to be in the future.
You don’t have a down payment saved up
You need a down payment to buy a home, and as we mentioned, they take a long time to save. Down payments need to be at least five per cent of a property’s purchase price, but often they reach 20 per cent, depending on the specific requirements that match the price of your home. In any case, your down payment will be a major expense. Most home buyers need to dedicate their time and money to creating a down payment savings fund. It can take years to build up these savings, and it is a task that a buyer must actively work to complete. If you haven’t begun saving for a down payment, this is a sure sign that renting is the better bet for you right now!
You don’t feel ready
When you are torn between renting or buying, you should always ask yourself what you want. You might be in a good financial position to buy and know where you want to live, but this doesn’t always mean buying is the right choice. You should feel excited and personally prepared to take on this adventure. It is a lot of work, and it is perfectly normal if you just don’t feel ready to go down the path of homeownership. Renting has a lot of advantages that appeal to many people! It’s much better to take your time with this process, rather than make a rash decision you might regret later.
When to consider buying
If you think you want to buy a home, what are the signs that will tell you whether you are ready? Here are a few scenarios that might speak to you.
You have been building your savings
Like we said earlier, saving for a home is an active effort. One of the most basic requirements for purchasing a home is demonstrating a pattern of dedicated saving. If you have been setting money aside for your down payment and mortgage costs, this shows you have been seriously thinking about homeownership for a long time. You may be approaching the point where you think you have saved enough to enter the market as an active buyer. In this case, be sure to reach out to a mortgage broker to start discussing your next steps!
You want to build home equity
While renting offers flexibility, it means you cannot build equity on the property. Home equity is a big reason people choose to purchase a home. Owning a valuable asset gives you leverage in the housing market for any future purchases or sales. It can also help you down the road if you need to access cash flow and you can refinance your mortgage. If you want to build home equity so you can benefit from these types of options, buying is certainly the path to take.
You are committed to the process
Finally, buying and owning a home requires a lot of dedication and commitment! Building your finances, searching the housing market, securing your mortgage approval, and every step in between takes a long time. Plus, owning a home gives you a huge amount of responsibility in the form of home care and maintenance. If you are ready to take on these tasks and be a dedicated and responsible home owner, this is a good sign you may be a solid candidate for buying.
When making the decision between renting or buying, it’s important to consider your personal needs as well as your financial situation. You shouldn’t feel pressured to become a home owner, nor should you hold back from entering the market if that’s what you want to do. Reaching out to a mortgage broker is a great first step when you decide homeownership is the path for you! We are ready to help you secure the perfect product so you can buy your perfect home.
If you have any questions about your mortgage, get in touch with us at Clinton Wilkins Mortgage Team! You can call us at (902) 482-2770 or contact us here.