Wednesday, April 21, 2021 / by Flr Team
One of the biggest benefits to home ownership is the equity you build with each mortgage payment instead of putting money into your landlord’s pocket. But it also doesn’t mean that buying is the best choice for you. As a renter, you enjoy more flexibility and avoid costs that come with ownership.
Some questions to ask yourself is:
Will you qualify for a mortgage?
Unless you have enough money in the bank to buy a house with cash, you will need to get a mortgage. First thing you will want to do is reach out to a lender to see what you qualify for. This is determined by the debt-to-income ratio. Debt-to-income ratio is the percentage of a consumer’s monthly gross income that goes toward paying debts.
Can you afford closing costs?
You have to be sure you have enough money to cover the closing costs. With a six-figure price tag, 3% or more can mean many thousands of dollars that you’ll need to pay upfront, in addition to your down payment.
Can you afford the neighborhood?
Real Estate expenses depend on where you choose to buy. What we mean by that is property taxes and price of insurance. You can check with your local tax office to confirm the property taxes.
How long do you plan to stick around?
If you’re buying a home, you want to plan to stay in the home for at least two to three years so you do not lose money. If you are not sure you can commit for 24 months, we would recommend renting and setting aside money you’ve saved for a down payment and closing costs for something in the future.
Are you up for the maintenance?
One major perk of being a renter is that your landlord is likely responsible for most of the maintenance and chores that homeowners have to deal with.
To put some perspective on this, here is an example of owning vs renting...
- Buys investment property for $50k
- Leases Property for 20 years and Profits $300k in Rental Fees
- Sells Property and Nets over $400k
- Combined profits (300k+400K)-50K=650k
- Less responsibility of home maintenance costs
- Leases Property for 20 years and pays 300k in Rental Fees
- Must move out after 20 years with nothing but Memories
Having said that, we hope that helps clear up any confusion or uncertainty that you may be experiencing. If you have any questions about this topic, please feel free to give us a call to chat today!
Florida Lifestyle Realty