Renting Vs. Owning – How to Choose Homeownership
Many potential buyers in our local market have already made their first steps towards homeownership – they’ve saved for a down payment, pored over the local listings for months, attended endless amounts of open houses, but time has passed them by and months, maybe even years, have passed and they’re still in their rental.
For many first-time homebuyers, making that leap into a purchase can be a frightening experience. Will you be happy there? Will your neighbors be nightmares? Will you feel tied down — house rich and cash poor? What if you lose your job (which is a common fear in the recent economy)? Will your commute be more than you can handle, especially if you have to live further out of the city because of what you can afford? In short, your fears stem from the unknown.
Meanwhile, your current rental is familiar. You’ve come to accept its shortcomings — the loud neighbors, the leaky toilet or faucets, the limited street parking. It has few surprises. But, you might have waited so long that some of the houses you’ve been looking at actually have come back on the market and prices continue to rise.
It’s not uncommon to feel like a home is the biggest purchase of your life – many people fear they will make a bad investment and pay too much, but a home should actually be seen as a place to live instead of just an investment.
Still, there’s hope. Your family, friends and co-workers took the leap and are reaping the benefits. Here’s how you can, too:
Firm Up Your Finances
Anticipate the new costs that you will incur, such as taxes, homeowners insurance, utility bills and commuting. This will help determine the maximum price you can spend on a house. If your budget will change with a new home, consider a trial run living on that amount for a few weeks, to make sure you can. Enlisting the help of a financial expert to get pre-qualified will give you an objective view of your finances. Remember, the first year is the most difficult. After that you will begin receiving tax benefits.
Partner With a Solutions Agent
Even though the Internet gives you access to endless amounts of market information, don’t be tempted to go it alone. Instead, interview several real estate agents and find one you like who listens to you. Your Solutions agent can line up properties to view, answer many of your questions and make connections for you in your new community. Solutions agents often have the inside track on new properties just coming on the market.
Accept Some Risk
Realize that there is uncertainty in everything, but no matter what happens, you will deal with it. Ask family and friends about their experiences and learn from them. Be sure to keep some cash reserves in the bank as a safety net. And remember, if an accident or weather-related event happens, you have homeowner’s insurance.
Fine Tune Your ‘Must-Haves’
Is there a community that you absolutely must live in? Are you adamant about a garage, a fireplace or a finished basement? Make your list of “must-haves.” You may find that you are willing to sacrifice one feature if the rest are fabulous. If you’re not crazy about the house, don’t bid. It’s important that you love it at the outset.
Be Ready to Bid
Regardless of the market, great houses don’t stay available for long if they are priced right and are in a great location. If you love it, be ready to make your best offer. If you are stalling in making a decision, ask yourself, “How will I feel if I don’t get this house?”
Reap the Reward
Owning a home can be one of the most exciting and satisfying things you will do in your life. It’s a place to gather friends and family and will create many memories in the years to come. It’s also an investment that can pay you personal dividends as well as financial and tax benefits.