Home Sweet Rented Home

Written by Posted On Wednesday, 21 May 2014 21:55

It's hard not to buy your first home when the market is burning hot and all your friends are buying homes.  But sometimes, you really are better off renting.  If you find yourself in any of the following situations, take a deep breath and consider the advantages of renting before rushing to buy.

Job Insecurity.  For most first-time home buyers, employment income is the only source of funds to pay for housing expenses.  If you're worried that you might lose your job or if you plan to leave your job, renting will leave you with more options.  A renter can dramatically reduce housing expenses within a matter of months by moving to a less expensive place.  An owner, by contrast, is usually stuck with very few options to reduce housing costs.  And if selling the house is part of the plan, you may have to wait six months or longer to complete the sale.  You can reduce some risk of losing income from a job loss by having a healthy savings account balance before you buy your home.

Possible Relocation.  The cost of selling a home often runs ten percent of the home's value between preparing the home for sale, sustaining duplicate housing expenses for several months, paying an agent's commission and other closing costs.  Despite values in many markets having increased by 20% or more in the last couple of years, a 4% annual increase in value is considered the norm.  If your house hasn't gone up dramatically and you end up having to move and sell the house within just a couple of years, you will likely have to pull money out of your pocket to get rid of the house.

You're Priced Out of Your Preferred Neighborhoods.  When buying your home, you're not just talking about an investment.  You're talking about where you and your family will be living for several years.  Don't settle for a neighborhood you hate, a horrendous commute or a house that's far too small or in poor condition.   Years of buyer's remorse is not worth the fleeting glory of closing on your first home.  Put your energies toward accumulating more savings and increasing your income so that you'll soon be able to afford the house you really want.

You Barely Qualify for Your Loan.  Many first-time home buyers fail to adequately understand the complete cost of owning.  In addition to the principal and interest on your home loan, you'll have taxes ,insurance, HOA dues or comparable maintenance costs and the inevitable new home purchases -- furniture, curtains, appliances, electronics, tools and a lawn mower.  And if anything breaks -- the roof starts leaking, the plumbing backs up -- you won't be solving that one with a phone call to the landlord.  Budget for all of these expenses and if they add up to more than a third of your income, home ownership right now is likely to be stressful.

You Don't Live in a Great Market.  There are many communities in which housing hasn't historically been a very good investment.  And in other places, the market may be so over-heated that if you buy now, you're risking a significant price drop in the near future.  If you're paying less to rent than you would to own and the near-term prospects for appreciation are low, why not continue renting and invest your money where you'll get a better return.  Perhaps in a few years you'll have better buying opportunities.


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Eva & Mike Robertson

Eva and Mike Robertson represent both buyers and sellers in Sacramento and El Dorado Counties.  They strive to treat every client with professionalism and integrity.  Call them today to experience for your self what their clients rave about!


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