To buy or not to buy, that is the question. There is no, one size fits all, answer to this questions. The answer depends on many variables.
Is your credit good enough to buy?
Are you staying in Phoenix for a while or are you planning to move soon?
Is there a possibility your employer will relocate you.
Are you thinking of getting married or moving in with someone soon?
Are you ready for the maintenance that comes with homeownership?
and, many more questions.
Today we will be speaking to the renter that should be buying. Which, by the way, is about 80% of current renters. We will look at why buying makes sense for these 80% of renters, and what it takes to buy a home.
What is needed to qualify for a home loan
Credit: In today’s mortgage market a score of 640 or greater
Income: This depends on the cost of the home, but for a $250k loan you should have an income of at least $2500 a month.
Down payment: Most mortgage lenders require 3% to 5%, but this is not always the case. Buyers are getting very creative when it comes to down payment. There are down payment assistance programs available to just about everyone. So don’t let this stop you.
Closing Costs: On average you will need about $3000. How buyers get around this is simple, they ask the seller for monetary concessions. In other words: Instead of asking for a price reduction, the seller does a monetary concession to cover the closing costs. This is very common in homes priced below $400k. Also, many down payment assistance programs will provide you with enough free money to cover the down payment and closing costs.
Impound Accounts: These are the impounds for your property taxes and insurance. When you pay your mortgage payment the taxes and insurance are included in that payment, but the lender will ask you for 6 months of each in advance. They always need six months worth in an impound account. On average this will be $1200 or more. It all depends on the cost of insurance and the taxes levied on the home.
MIP or PMI: If you finance FHA and don’t have 20% down, then you will have to pay MIP (mortgage insurance premium). If you are financing conventional, and don’t have the 20% down, then you will pay PMI (private mortgage insurance). Typically, this will be about .50%, or for a $250k it will be approximately $250.00 per month.
Articles To Read About Renting Vs Buying:
What are the disadvantages to renting?
You are paying someone else’s mortgage
Your rent is subject to increases ever year
You can’t really make it a home
You can’t write off the rent on your taxes
Basically, you are showing your money away!
Bottom Line: If you want to buy, there is no reason to wait!
Find out if renting or buying makes sense for you. Contact Me