With the cost of rent going up and historically low mortgage rates, homeownership has become financially enticing, once again.
Rent prices have been increasing at a higher rate than home prices. In fact, rents increased faster than home values in 20 of the 35 largest markets. Renters in San Francisco and Seattle are paying over 14 percent more than in 2014, while renters in Denver shelled out nearly 11.6 percent more.
So, you may prefer the flexibility of renting, but the time is now to take advantage of low down payment loans and near historic low mortgage rates.
So, do I rent or buy?
Regardless of whether you rent or own, you shouldn’t pay more than 30% of your take-home income on housing costs, including rent/mortgage payment, insurance, taxes, etc.
Factors to consider:
- Review your current debt and credit report for red flags on your credit.
- How long are you planning to stay in the area – is this a short- term living situation, or are you planning to travel more once you retire in a few years?
- Are you in a transitional period in life (retiring soon, graduating from school, relocating for family), or are you stable?
- Are you prepared to pay for unexpected, hidden costs?
- Weather-related needs
- Homeowners association dues/fees
- Property taxes
- Do you have the money for a down payment or a plan to save for it?