Do you understand the differences between being a buyer and a renter? For some people, it’s not clear what the responsibilities and financial obligations truly are for a buyer vs. a renter. There are also some major myths about both scenarios, such as the belief that renting is a bigger savings to you financially than buying or that you’re simply too young to buy or unlikely to get a loan.
These myths stop the right families from buying a home all of the time when they really would benefit greatly from taking the plunge. Take a look at the top four myths of renting vs. buying so that you can understand why buying may be the right decision for you after all.
Your savings will take too much of a hit
One of the biggest myths that stop people from buying a home is the belief that their savings is going to be hit too hard with expense after expense. While it’s true that you’ll need to spend money on a down payment, closing costs, and furnishings, these are all typically one time payments. Once you’re in the house, you’ll just make your regular mortgage payments like the rent you used to pay.
You’ll want to have a nest egg that can be saved for repairs or maintenance needs that come up, but otherwise you’ll just make monthly payments towards your mortgage, homeowners insurance, and savings for your annual property taxes. Your rent payment would just go towards your landlord’s investment rather than your own, while the money you put in your house ends up being an investment for you.
You’ll also become eligible for more credit opportunities and once your home is paid off in 30 years, it’s yours with no more monthly payments. Your rent payments would never end and you don’t see any return on those payments, but rather they just vanish once they leave your checking account.
Thinking you’re too young to own a home
Others think they are just too young to be a home owner. Don’t believe the lie that you are too young to own your first home and have a place to call your own. In fact, millennials are the biggest group of buyers right now with over 35% of new homebuyers falling in this category as of 2015.
Being a young millennial buying your first home is common and in fact, this is the largest group of buyers in the last few years. The median age of a millennial homebuyer is 30 which means those buyers in their 20’s and 30’s are more likely to purchase right now compared to Gen X’ers and Baby Boomers. In fact, Baby Boomers are more likely to hit apartment living as they get older.
If you’re worried about getting a loan
While you may think you’re too young to buy a home, you may also believe you’re not likely to get a loan anyhow. Fortunately, the times of subprime lending are in the past and these days, banks are only giving loans to homeowners that can prove they qualify. They aren’t just giving a loan out to anybody, but being cautious in their decision.
That means that if you qualify for a loan because of your great credit history, your on-time payments each month, and your low debt-to-income ratio, you know that you are someone the bank trusts to make their payments on time each month. You don’t have to worry about it being impossible to get a loan either, now that names like Fannie Mae and Freddie Mac have started initiatives to help first-time owners get mortgages with very low down payments.
As long as you have a high credit score and you’ll pay for private mortgage insurance, you can likely get approved with programs like theirs. Just make sure you pay off debts, save up for a down payment of some sort, and do what you can to raise your credit score in order to qualify for a mortgage.
Owning a home is too expensive
While you may have been worried about your savings being depleted, you may also think homeownership is simply too expensive. Sometimes look at the big picture is a better way to make your decision. Owning a home is not much different than paying your monthly rent.
Rent prices have increased with the demand for rental properties and it’s becoming cheaper to buy a house than rent in most states. Your monthly mortgage payment is likely going to be less than your rent costs and you’ll be investing in your own equity rather than giving it to someone’s else investment. Your interest payments are tax deductible and you’ll be saving on those regular moving costs, application fees, pet fees, payments to a storage unit from a lack of space, and increases every time you have to renew your lease.
Once you overcome the fear of these four major myths behind renting vs. buying, you’ll realize that buying isn’t so scary after all. Invest in your family’s financial picture by buying and leaving the renting world once and for all.
If you have any questions, comments, or want to make sure you have all of your bases covered when buying a home in the Pittsburgh area, Feel free to e-mail me at email@example.com
I am an annual top producing, full time, professional RE/MAX Realtor in the Greater Pittsburgh area. I have the most Zillow Group reviews of any individual agent in the entire state of Pennsylvania. I hold coveted real estate designations such as, CRS, ABR, GRI, SRES, e-PRO & am a member of the Institute of Luxury Home Marketing.
My 2015 stats included an average sale price to list price ratio of 98%, an average days on the marked of 41 and nearly $14 million in total production. I was also inducted into the RE/MAX Hall of Fame.
I am also the social media/technology director at RE/MAX Advanced, REALTORS. You can find me on any social media platform by searching #BrianSellsPittsburgh
I donate a portion of my commission to the Children’s Miracle Network and I am also a member of the Giveback Homes Organization and the Teacher Next Door Program.
Posted on February 28, 2017 at 1:41 pm by Brian Teyssier