"To buy or to rent?"
That seems to be the question lots of people are wrestling with these days with interest rates still near historic lows and the housing market continuing to gain strength in most communities. If making a move is on your list of 2016 goals or resolutions, you might be wondering whether it makes more sense to rent a new place in the Denver Metro area, or to buy a Colorado home.
While each option has its advantages and disadvantages, the decision to purchase a home as opposed to renting is a complicated one and really depends a lot on your individual circumstances. In a market as hot as Denver, both home prices and rents are bound to keep going up.
According to a recent survey conducted for the National Association of REALTORS, nearly eight out of 10 respondents believe buying a home today is a good financial decision. But the question that remains is whether or not now is the right time for you to buy.
For most people, buying a home is the biggest financial decision they will make in their lifetime. Here are just a few things to consider when deciding between renting and buying:
How much will your rent increase in the future?Obviously no one knows for sure what the future will bring, but a recent study found that rents on average are increasing faster than home prices. In fact, homeownership remains 38% cheaper than renting nationally, and it's less expensive in all of the 100 largest metro areas. But each neighborhood and each home are different, so it's important to do your homework.
Do you have a steady income?Buying may be a sound financial decision for those with documented income and a good credit history. A steady income can provide a strong basis for the initial down payment and future mortgage payments. Lenders will look at your ability to repay the mortgage and how positive your credit history is when deciding if you qualify for a loan.
How long do you plan to stay in your home?Although homes often appreciate over time in most areas and many owners build equity through monthly mortgage payments that go towards the principal of the loan, values can go up or down during any period of time. Generally, the longer you plan on staying in your home, the more likely that buying may be the right move for you.
Can you cover the other expenses?When you own a single family home, you not your landlord will be responsible for all of the maintenance and repairs, everything from a leaky faucet to replacing a roof. Will you have enough money left over in your budget each month (after paying the mortgage, property taxes and insurance) to cover any repair issues that may pop up?
How do your other options compare?For renters, calculating month-to-month housing expenses is as easy as inquiring about the monthly rent and average utilities. The calculation gets a bit more complicated when considering the monthly cost and benefits of owning a home. Your Live Urban agent can help you crunch the numbers, and can also help you find either the perfect home to buy or a sweet place to rent.
There is a lot to consider when weighing the pros and cons of buying a home, and you'll likely have a lot of questions. The best thing that you can do before making a decision is to do your homework and become better educated on your options. And, when you're ready, don't hesitate to reach out to an expert agent - we're here to help, whether you decide to rent, buy, or stay put!
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