Its always been an accepted fact that it makes more sense to buy a home rather than rent if you have the money. But the last 24 months have turned those beliefs upside down and folks are finding an uncommon real estate market that is difficult to understand.
While the super-low interest rates and plummeting housing prices seem to make a great case for buying a home, more and more consumers are looking to rent or rent-to-buy opportunities. But evaluating such a scenario can be tricky.
In general, when should you rent vs. buy or rent-to-buy? I have discovered that there are five fundamental considerations to the decision:
1. Credit Score. For those many individuals with some dings on their credit report, it will be very difficult to get a mortgage loan in today's environment. However, you may be able to build equity in a home while improving your credit score through a rent-to-own situation. However, if you are fortunate to have a high credit score, now might be the ideal time to obtain a loan at interest rates that are lower than they have been in fifty years.
2. Cash Flow Needs. It is critical nowadays to make sure you have enough cash flow to meet all of your monthly obligations, and many people are finding that it is hard to set aside extra to build the down payment needed for most mortgage loans. These folks are finding that monthly rent are typically lower than a monthly mortgage payment, which allows them to preserve their good credit and meet other monthly expenses more easily.
3. Employment Concerns. I came across an article by Forbes.com Real Estate columnist Matt Woolsey recently, in which he stated "Given the state of the job market right now, the anchor of full ownership is a heavy one." I have found that many of my clients share that belief, particularly as they are concerned over losing their job. If you share this unease, the rent or rent-to-own option may be a more palatable choice, as there is less worry over your credit being damaged if you are unable to meet your payments.
4. The Flee Factor. If you have moved to a new city or state recently, or plan to move to a new location, it isnt always a good idea to purchase a home immediately. Renting gives the gift of time to evaluate the surrounding areas in your new city or state without the danger of financial loss by needing to sell soon after you purchased in a declining market.
5. Market Unpredictability. Even in recovering real estate markets such as Denver, the experts cannot agree when the housing market will genuinely be restored. For many, renting is an attractive option while they wait to see what the market does.
There are definitely arguments for each choice and the essential component is that you learn all the options to make the best decision for you. An experienced real estate professional can help you ask the questions and discover the answers for you. There are some new and unique options that folks may have not investigated in the past that might be just right in your situation.
While the super-low interest rates and plummeting housing prices seem to make a great case for buying a home, more and more consumers are looking to rent or rent-to-buy opportunities. But evaluating such a scenario can be tricky.
In general, when should you rent vs. buy or rent-to-buy? I have discovered that there are five fundamental considerations to the decision:
1. Credit Score. For those many individuals with some dings on their credit report, it will be very difficult to get a mortgage loan in today's environment. However, you may be able to build equity in a home while improving your credit score through a rent-to-own situation. However, if you are fortunate to have a high credit score, now might be the ideal time to obtain a loan at interest rates that are lower than they have been in fifty years.
2. Cash Flow Needs. It is critical nowadays to make sure you have enough cash flow to meet all of your monthly obligations, and many people are finding that it is hard to set aside extra to build the down payment needed for most mortgage loans. These folks are finding that monthly rent are typically lower than a monthly mortgage payment, which allows them to preserve their good credit and meet other monthly expenses more easily.
3. Employment Concerns. I came across an article by Forbes.com Real Estate columnist Matt Woolsey recently, in which he stated "Given the state of the job market right now, the anchor of full ownership is a heavy one." I have found that many of my clients share that belief, particularly as they are concerned over losing their job. If you share this unease, the rent or rent-to-own option may be a more palatable choice, as there is less worry over your credit being damaged if you are unable to meet your payments.
4. The Flee Factor. If you have moved to a new city or state recently, or plan to move to a new location, it isnt always a good idea to purchase a home immediately. Renting gives the gift of time to evaluate the surrounding areas in your new city or state without the danger of financial loss by needing to sell soon after you purchased in a declining market.
5. Market Unpredictability. Even in recovering real estate markets such as Denver, the experts cannot agree when the housing market will genuinely be restored. For many, renting is an attractive option while they wait to see what the market does.
There are definitely arguments for each choice and the essential component is that you learn all the options to make the best decision for you. An experienced real estate professional can help you ask the questions and discover the answers for you. There are some new and unique options that folks may have not investigated in the past that might be just right in your situation.
About the Author:
Joyce Kelly specializes in assisting national clients with organizational relocation services. She is the owner and co-founder of DenverRentAHome.com, offering to Littleton, Colorado and outlying areas over 75 years of combined expertise in the residential rental and property management fields. Visit their site to find out how DenverRentaHome.com can help you find or fill your home today.
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