Home ownership has been the American Dream for many people for years. However it's not for everyone. Some people are more comfortable knowing they can give a 30 day notice and move to another rental. In a first time homebuyer class that I teach we talk about the reasons for owning a home. There are lots of reasons people want to own their home from gaining equity in the home to being able to paint and garden. Some people want to continue to rent so someone else is responsible for the home maintenance – the furnace goes out, you can call your landlord instead of a repairman! For those on the fence about buying instead of renting, here are some reasons to buy!
-Flexible loan options for those with lower credit scores. For most conventional loans you need at least a 660 score, maybe a 680. But FHA will let you go to 640 and sometimes as low as 580. VA and USDA loans will go to 640 typically.
-You do not need a large down payment. Some people think they need 20% down in order to buy, that's not the case. You can get a conventional mortgage with as little as 3-5% down, depending on whether you are using a first time homebuyer program or not. FHA requires 3.5% down, VA and USDA still have zero down programs. You can ask the seller to help pay for closing costs too.
-Opportunity to build equity. If you are renting, you don't gain any equity in the home you are living in. If you buy, you have the chance to gain equity and at some point you can sell and have that money to buy another home. If you are renting, the montly payment goes to the landlord and they get to equity in the home, not you. Yes we have seen homes drop in value in the past few years, but those same homes are now gaining equity again.
-Fixed monthly payments. Your rent payment will probably go up every year. On average, they go up about 3.9%. Your mortgage payment will not change if you have a 15 or 30 year fixed rate mortgage. Your property taxes and insurance may increase, but not the principal and interest.
-Interest rates are low now. If you are thinking about buying, now is a great time. Home prices are starting to increase and interest rates are slowly going up. If you wait too long, you may price yourself out of a home.
Only you know what is right for you. If you are not sure, talk to a loan officer and that way you can make an informed decision. If you are trying to fix your credit, you may need to wait. If your income is not stable, you may need to wait. But if you can buy now, it is a great time to be looking and buying!
Leslie Vanderwerf, NMLS ID#335509, American Mortgage & Equity Consultants – Email – Website
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