As U.S. homes prices start to rise, many renters may soon be asking: Is now the right time to buy a new home before prices rise further?
Own or rent? It’s a common question -- and depending upon each prospective buyer’s wants, needs and financial situation, the answer may vary.Househunters may want to ask themselves the following question to see if the time may be right for them to join the ranks of the 65 percent of Americans who own their own home.
What’s the current state of the real estate market in your desired area?
Real estate prices and conditions can vary from place to place. If home prices are starting to climb, observers say, househunters may want to consider buying a home before prices rise further.
How long do you plan to stay in your new home?
For those who enjoy the freedom of picking up and moving every few years, renting is probably the better option, industry experts say. But for individuals or families looking to settle down and become part of a community, buying is an attractive option -- especially for buyers who plan to stay in their new home for at least five years. After that point, homeowners have recouped some of the up-front costs involved in purchasing a house and are well on their way to building equity in their home.
How important is financial stability to you?
One of the great advantages of owning a home is the ability to lock in a monthly mortgage payment. While rents are subject to inflation and typically rise year after year, a fixed mortgage gives homeowners the security of knowing that their monthly payment will never go up.
Over time, that can add up to considerable savings. In 1982, for example, the average U.S. monthly rent was $320. Thirty years later, in 2012, the average rent was $884. So while a person who began renting a home in 1982 would have seen his monthly payment, on average, increase 174 percent over three decades, someone who purchased his home the same year not only would have enjoyed fixed monthly payments the entire time, but also would now own his home free and clear and have gained a valuable asset. The New York Times offers an interactive own vs. rent calculator that helps househunters determine whether buying a home would be financially beneficial.
How secure are your finances?
Renting often appeals to young professionals just beginning their careers or those who may be in a state of “job flux.” Consider the following: Is your current job or career relatively stable and secure? What about your credit rating: Do you have any credit issues, such as missed payments? If you’ve been in your current job for a while and your credit score is good, now may be a good time to purchase a home.
How do you feel about maintenance?
For those who prefer to have all of their maintenance and utilities issues handled by someone else, renting is an attractive option. Typically, rental apartments or homes come with some or all utilities included as well as a maintenance person to handle repairs. But while homeowners accept responsibility for maintaining and repairing their home, real estate experts say, those costs are typically offset by the savings homeowners gain from having fixed monthly payments. In addition, homeowners often receive a sizable mortgage interest deduction on their taxes, leading to even greater savings.
How much do you value independence?
Renters are usually restricted from making any changes to the property in question. Prefer bright pink shag carpeting or chartreuse walls? Renters are probably out of luck. Homeowners, on the other hand, enjoy greater freedom to decorate and remodel their home as they see fit.
Considering purchasing a new home? Visit the Nocatee Welcome Center or call 1-800-NOCATEE to learn about available single family homes or townhomes for sale.
