The question if you should rent or own is a big one and it’s not as straightforward as you might think. Most people dream of someday owning a home, but it’s different for every individual and based on every stage of life. At Community Lending of America, we believe that owning your home should be your end goal. However, there are some important questions you should ask before starting the home-buying process.
How long will you I there?
If you plan on living in your future home for more than 5 years, buying is definitely something to consider. If you plan on moving sooner than that, renting a home or apartment space with a lower rent cost than your mortgage would be, can help you save money faster. By renting for a short period of time, you could free up some income to save for your dream home more quickly. Also, if you are new to the area, renting might be helpful for a short period of time in order to figure out what parts of town you like the best. It’s helpful to take some time to figure out what school districts would work well for your family, what areas you find yourself hanging out at most, such as restaurants, shopping centers and parks, and where the new friends you will make live.
How much do I have for a down payment?
When saving for a down payment, it’s important to keep in mind that there are additional fees in the home buying process that need to be factored in. In addition to your down payment, make sure to save for taxes, appraisals, and insurance, to name a few. If you’re not quite there with your savings yet, don’t fret, keep saving. You will get there! There are also a variety of lending options that can help you with your down payment. If you aren’t sure, speak to a reputable lender to advise you on all of them.
Can I afford all the costs of owning a home?
A mortgage calculator is a useful tool to help you factor in how much your mortgage will be based on loan amount, interest rate, and amount of time you estimate paying off your mortgage. However, there are more costs than just the mortgage that one needs to consider when owning a home. For example, property taxes, utilities, and home repairs are a few you can anticipate. Having an accurate budget is very important when planning your purchase. This budget tool will help you consider all of your expenses when planning.
For a full list of other things to consider before buying your home, check out our blog post Things I Wish I Knew When I Bought My First Home.
What is my credit score?
You are entitled to three free credit reports a year. Make sure to take advantage of these reports and also to correct any issues or problems you find in your reports. Community Lending of America recommends a credit score in the mid-600s or above. This will help with your loan applications and affect your mortgage payment. If your score is not yet in this range, making small adjustments such as paying your bills on time, setting up recurring payments, and reducing debt are a few little things you can do to improve your score. If you do not yet have a credit history, this is also the time to start building your credit.
When you are ready to move forward in the process of owning your home, Community Lending of America is a here to make your process simple. For a free consultation, just visit our website or give us a call.