Thursday, January 31, 2013

Rent Vs Buy Decision Makers

Key Rent Vs Buy Decision Makers

Rent vs Buy dilemma has haunted 1st time home buyers forever. Yet, for the uninitiated home buyer, this has to be an expected challenge.
At face value, buying a home is a better decision than renting one. With a home purchase, the buyer has a key opportunity to gain equity(value) as the first step of his future financial success.
Anyone who has rented for more than 6 months quickly realize that they may as well as light a match to the rent check as they are gaining no value from the rent payment other than a roof over their head. Typically, the home owner can expect to receive a 2 to 5% return on their investment in a home ever year.
Though the bubble of the early part of 2000s has cause this paradigm to be turned on its head for some people, this by no means suggest that home ownership is worse than renting. It just "aint' true".
Key Advantages to Home Ownership:

  • Initial "One Month" Grace Period between last rent payment of prior month and 1st Home Mortgage Payment
  • Tax Benefit -- Mortgage Interest Deduction can lower taxes, increasing refunds significantly.
  • Improved Credit Score
  • Improve Ability to Qualify for other credit purchases....buy a house and the car dealership will darn near give you a car!!!
  • Improve the Community...home owners take care and improve a neighborhood
  • Possible Equity Growth assist housing market through move-up purchases as lifestyle, job transfers/promotions and family needs permit
Yet, the prep for the renter to become a home owner is paramount!!!

  • Clean up Credit Report; Raise credit score above 600(minimum)
  • Take 1st Time Home Owners Class
  • Learn about Mortgage Types, Down Payments and Qualifications
  • Save...Save...Save Downpayment and Closing Costs
  • Investigate areas of town that interest the buyer and are within the purchasing power of the buyer
  • Be employed in the same field, preferably the same employer, for a minimum of two years. All mortgage applicants should meet this requirement.
  • If Gift to be provided by Parents or another family member to make the home purchase, find out guidelines and stipulations now.
  • Know that unlike renting, home ownership is a long term commitment. Purchasing a home for one year prior to relocation out of town will be financially disastrous for most buyers...think 5-7 years.
Selecting a Realtor like me early in this process is invaluable for the 1st Time Home Buyer. The Realtor can help the renter prepare to buy and guide him/her through the steps noted above. Every buyer's needs are specific and the Realtor will ensure those needs are met!!!

Bryan Cerny, Associate Broker, GRI, ABR, SRES, SFR
Rose &Womble Realty, Chesapeake, VA
Licensed in VA & NC
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