Wednesday, August 29, 2012

Rent Vs Buying ? Are you ready ?

If your thinking about buying a home rather than renting there are some very obvious reasons that now is the time to buy but lets take a look at 3 of the best reasons you should buy now! 
  • Low Interest Rates 
  • Homes Priced To Sell 
  • Inventory Of Homes To Choose From 
Now of course there are always pros and cons to both renting and buying, so lets take a quick look at those.  

Renting Pro      Ability to move easily, this is important for those who often travel for work. 
Renting Pro      Renting you are not responsible for many things such as roofs, leaks ect.

Renting Con     Your money rent will never earn you any return.  
Renting Con     Increase in rent according to the market and become more costly than owning.

Buying Pro       Tax deductions on property taxes, interest. 
Buying Pro       Ability to take from your IRA penantly free for down payment.
Buying Pro       Work done to your own home raises its equity 

Buying Con      Upkeep goes into owning a home choose a home that fits your needs 

Their are many experts saying that one year from now everyone will be saying that they should have bought a home in 2012.  I have to say I would have to agree with that statement, buyers that are thinking they may want to try and buy a home should call a mortgage broker and see if they qualify immediately ! Now if your not quite ready to make that call and your just curious whether or not you could qualify lets take a look at some of the things you will need to have in order.  

  1. Credit Score - Obviously you need to have decent credit but most banks will work with you if you have a credit score of 625 or higher.  
  2. Work History - You need to have been consistently working in a field for 2 years to show consistency in your income.  
  3. Debt To Income - This is just as important as your credit score, take a look at this simple calculator here for your debt to income ratio.  
  4. Available Funds - Most down payments now are minimal at 3.5% on a FHA Loan which on a $250,000 home is only abut $8500, plus your closing costs.  Taking penantly free from your IRA is a great option also, allowing you to only need to budget for closing costs which on average can be $8,000 - $12,000.  
Lets take a look at some of the statistics for our current market to give you an idea of what kind of money you may want to expect to spend on a home.  

Now you can see that we are staying generally around the $300,000 mark, but for someone looking for the average home can comfortable purchase between $250,000 - $300,000.  

The average whole house rental for a 3 bedroom, 1 bath home here on the island will cost you about $1800 or higher, and normally you will still be responsible for all of the utilities on top of that.  Your costs on a renting a home would be much better spent on a home that you own! 

Other Available Options 

There are plenty of homes out their for first time buyers, and not only is New York now offering grants to help you but many towns and villages are building housing developments specifically for first time buyers.  A great example of this is the Courtland Square Condos, that are new construction condos that were recently built here in Bayshore.  

These condos offer a unique opportunity because the price of the condo is not decided by the builder or the buyer, it is decided buy the buyers income.  If your salary is under a certain amount than in turn the price of the condo will be one particular price.  There are certain rules and regulations that must be followed when you are purchasing one of these such as, it is required you take a class to learn about the responsibility of home ownership and you also must fill out a detailed application form.  To better educate you on this type of application it is available for PDF Download here.  When you purchase one of these condos the state and town are paying almost $100,000 in grants to help you get your first home! 

Another option is Rent To Own, now this is something you need to be very careful with.  You must meet with an attorney before you sign into something like this, but for some that are just looking to either fix a credit issue or save up a bit more for down payment it can be a great option.  There is a difference between Rent With Option To Buy, and Rent To Own: The difference between the 2 is pretty simple one gives you the option to buy, and the other locks you into buying the home within a particular time period.  

If you are thinking about purchasing a home but are still undecided about whether or not now is the right time to buy and would like additional information please feel free to contact me directly! 

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