Rates at the beginning of 2013 are still very low, so if you can secure financing, your monthly mortgage payment is likely to be a very attractive number. If you’re debating whether to rent or buy, do your homework. Find a “test case” house online that meets your criteria of location, number of bedrooms, etc. Then run the numbers through a free online calculator. When you’re ready, a loan officer can help you get more precise estimates.
It varies by region, but in many areas, the price of rent is still high coming off the demand caused by the downturn in the housing market. It is not unusual for the cost of monthly rent to exceed that of a mortgage payment for a comparable living space. In September of 2012, Trulia.com studied some key market factors to help determine if buying was actually more affordable. Trulia’s Chief Economist, Jed Kolko said, “Based on asking prices and rents during the summer of 2012, buying is now 45% cheaper than renting in the 100 largest U.S. Metros, on average—that’s a savings of $771 a month.”
Based on Trulia’s numbers, buying a home might seem like the obvious option, but you must always keep your individual situation in mind. How long you plan to live in the area, for example, can factor in to your decision. And while renting has the advantage of less maintenance responsibilities, you lose the chance to build equity. But are you ready to take the next step? Ask yourself these questions:
- Do you have a reliable source of income that can be documented? Do you have a two-year employment history?
- Do you have a record for paying bills on time?
- Can you afford to make payments on outstanding debts, such as school or car loans?