MOVING TO A NEW CITY? SHOULD I RENT OR SHOULD I BUY?
GET A ROAD MAP IN PLACE BEFORE YOU PACK AND MOVE!
While it is easy to look at the different rental payments and compare, you should also take the time to talk to a lender who can show you the price of ownership by showing you cash needed to close and a full payment estimate including:
Principal + Interest + Taxes + Insurance + Mortgage Insurance + HOA dues = Total Payment
Many people make a mistake by googling or viewing a loan calculator and deciding they can easily make the payment! But, they have not added the necessary taxes, insurance, HOA dues and even the mortgage insurance premium which is required with a less than 20% down payment. You need all this factored in to get a true road map to help you decide which direction to go.
RENT PAYMENT VS MORTGAGE PAYMENT
When mortgage rates are low, your mortgage payment will come out lower than market rents more often or not. A rent-or-buy calculator can help with your evaluation. You should also look at the long-term wealth-building benefit of homeownership that comes with rising values and increasing your equity as you pay off your home loan.
Have a trusted Expert Advisor on The Binder Team look at the movement of prices in the overall metropolitan area or in a more concise targeted location of interest over the last 3 years. This information in conjunction with the months of supply on hand can give you enough information to forecast two more years out to determine how much equity you can build short term. So, in addition to your regular house payments you can earn by just living in the home! The DFW area has increased 30% on average over the last 3 years. A typical balanced market generates 3-5% per year increases in the DFW area. Supply will determine when the market stabilizes and that is how the forecast is determined. We at The Binder Team have a proprietary calculator where statistics directly from our MLS system build a trend in any chosen area and calculate the month's of supply on hand. Just ask and we will compile this information for you.
ARE YOU EMOTIONALLY READY TO BUY A HOUSE?
One of the benefits of renting an apartment is that you typically only commit to a lease for one year. If you’re buying a home, you’ll need to choose a neighborhood and a home where you want to live for the next several years while you recoup the cost of buying and build equity. If you lack knowledge about the area you are moving then it may be better to rent for awhile and "try" an area out.
DO YOU HAVE A 5 YEAR PLAN?
While no one knows with absolute certainty what will happen over time, if your plans include switching careers or moving out of state within 3 years, you’re probably better off renting. If you are planning a long term stay in the area, it is recommended sooner than later in an area where prices are rapidly rising. You can purchase and hop on that trend of rising prices capturing more equity for yourself by purchasing sooner. Always take
ARE YOU READY TO TAKE CARE OF A HOME?
Along with the joy of decorating your home and changing it to meet your needs, you need to budget at least 1 to 3 percent of the home price each year for repairs. Whether you can handle work yourself or need to hire contractors, you should be prepared for the time and expense of maintaining your property so that it can keep its value and avoid more costly repairs in the future. Deferred maintenance can build up over time and create a situation that is overwhelming and can cause you headache and loss when trying to sell. Maintaining as you go along is a must.
While there are loan programs available to some borrowers with a down payment of 3.5 percent and sometimes less, you’ll need some cash for a deposit, a down payment, closing costs and an emergency fund when you buy a home. Another reason to consult with a good loan officer prior to deciding to make your move. The loan officer should be located in the same State where you are moving or be licensed in that State. Local lenders are more in tune to specialty loans and situations that are related to the area. There are zero down available in rural areas for some buyers. A loan officer will ask you the right questions to direct you to the best program. The most important part of consulting with a loan officer is to know how much cash you will need to put down on the house and how much reserves you will need in the bank after you close.
DO YOU KNOW WHAT YOUR CREDIT REPORT LOOKS LIKE?
Request your free credit report at AnnualCreditReport.com to check for errors and any negative information on your report. For a small fee you can get your credit score. Lenders typically require a minimum credit score of 620 or 640 and higher for government-insured loan programs, but for the lowest mortgage rates you need a credit score of 740 or above. The credit report your lender pulls comes from a special clearinghouse with a combination of several credit reporting agencies. Another reason it helps you to consult a local lender first.
WILL YOUR BUDGET ACCOMMODATE THE TYPE OF HOUSE YOU WANT TO BUY?
You can do a quick search on TheBinderTeam.com to see what properties are available in neighborhoods where you want to live, or consult a one of our agents for a more in-depth consultation about your priorities and your local market.
Your answers to these questions and consultations with professionals such as a local lender and a Realtor from The Binder Team can help you make the right choice and determine if you’re ready to buy now or need to wait a little longer to become a homeowner.
Contact The Binder Team for assistance with buying or leasing. We give the same professional service whether you are buying or leasing and promise to provide you with all the necessary tools to make the best decision for you and your family. That's what we do.