Today’s reduced home prices, low mortgage rates, and solid home inventory have made buying a house attractive, and many Atlantans are asking themselves if it’s the time to give up renting to buy their own home. Making the move from renting to home ownership is an emotional decision, and also very much a financial one.
While setting down roots is often considered a natural step, job responsibilities, family ties, and personal satisfaction can weigh heavy on the decision to give up the flexibility of renting under a 1 year lease, to the 15 or 30 year commitment of a mortgage. Personality and time commitments play a big part in the decision of what type of home to buy as renters are accustom simply making a phone call to fix maintenance problems, and to having all outdoor maintenance, landscaping and yard work done for them. Home ownership comes with a certain degree of upkeep which varies based on whether you buy a condo, townhouse, single family or ranch-style property.
If you’re not a handyman (or handywoman), consider the costs of modernizing and redecorating as you’ll need to hire out, so you may want to just look at move-in ready homes. Consider your out of pocket costs will be to get into the new home (keeping in mind what you’d “love to have”), then talk to the mortgage professionals here about what you can truly afford month to month. You also want to be sure that the home you buy is one you’ll be happy in for years to come. Don’t make the mistake of convincing yourself that home buying a short-term commitment.
Emotions matter…i f you’ve just gone through a big life change such as marriage, a newborn, divorce, job change, or a death in the family, taking on the responsibility of owning a home might not be the best decision today.
When considering a move from a rental unit to a home, you need to find a neighborhood and a house that suits your lifestyle, commute time, and budget. You may want to live in Woodstock, but don’t want to spend the commute time to get to your south Atlanta job because you have young children in daycare. Regardless of where you decide to live, be sure to have your Realtor share the sales price trends of homes in the neighborhoods you’re considering, after all, a home is an investment.
Buying a home is in fact one of the biggest investments you will make – ever. So…armed with good credit, a stable job, and cash in the bank, making that investment may very well be a wise financial decision.
- Flexibility (relocating is easier)
- Can invest money elsewhere (stock market)
- No upkeep fees (drippy faucets, broken appliances, etc.)
- Tax-breaks (mortgage interest and property tax deductions)
- Potential for building equity (traditionally 4-5% annually)
- Emotional satisfaction/pride
- Security, stability, comfort
- No equity
- Annual rent increases
- Property taxes
- Mortgage costs
- Loss of flexibility should you want to move
If you are on the fence about whether to buy or rent, use what’s called the rent ratio, an over-simplified starting point. Take the purchase price of a house and divide it by the yearly cost of renting. The New York Times has a great calculator to help you in your decision making process: http://www.nytimes.com/interactive/business/buy-rent-calculator.html.
You may also want to read our Tips for First Time Home Buyers blog post – http://www.mortgageguysatlanta.com/2012/07/26/tips-for-first-time-home-buyers/
All in all the decision to assume a mortgage and buy a home is a very personal one. But armed with accurate information, it’s a decision you can feel good about. Contact Atlanta’s Mortgage Guys before you tear up that rental agreement, and we’ll help you review your options so you can make the best choice for you.