Buying vs renting

Many people believe that owning your own home is the best investment an American can make. In many ways this is true. However, there are several pros and cons to owning your own home. I worked in the mortgage industry for nearly 20 years. Over the years I have seen person after person literally have there life and credit ruined buy a person who was only interested in making a quick buck. Sadly, this is what went on with the majority of mortgages that were sold at several of the mortgage companies I have worked for. Clients were simply taken advantage of if they were not knowledgeable about the process of buying a house or refinancing. Not being knowledgeable about what you are going into before buying a house can cause it to be the worst decision you have ever made in your life. I will discuss some benefits of renting instead of buying and vice versa. I will also provide you with tips for buy a house so that you are not taken advantage of while trying to achieve your American dream.

Renting is a very convenient option for many people. You are not tied down to any long term commitment. Approval is usually based more on rental history as instead of credit. A person can also easily move when time permits. When something such as an appliance or HAVC unit need repairs, maintenance can be called to fix the problem. These are extremely important factors to consider before buying a house. When a person decides to buy a house if anything goes wrong or needs to be repaired, the home owner is responsible for making any repairs. Something as simple as the HAVC not blowing out cold air can cost a person as much as $2000.00 to repair.

When you buy a house you should be prepared to be in it for years and years. It takes many years before you see the balance on your mortgage began to go down. So you will owe the same amount that the house is worth for several years with the balance decreasing little by little as time goes on. This means that if you want to sell your house it will be very had to because there will be no equity in the house (equity = the difference between the amount you owe on the house and the amount the house is worth). If you house decreases in value it could bring a whole new set of problems if you want to sell. Because you may owe more than what the house is worth. Be sure to only buy a house if you know you are moving to a locating where you would like to stay for years, because you never know what the future might bring

Credit is a major factor when buying a house. A house that cost 100,000 dollars could cost a person 800.00 per month and that including taxes and insurance. That same house could cost someone else 1200.00 per month or even higher. This factor that will make the difference is credit. Credit is the number one determining factor in how much a person will pay per month besides the cost of the house. People have 3 credit scores, a high score, middle score and a low score. Mortgage companies give you a rate based on the middle of the 3 scores. If a person has a middle credit score below 620 they should try to pull there score up above 620 before buying a house. Buy doing so it puts you in the category to receive what is called a conforming mortgage. Conforming mortgages give you a much lower interest rate which will in turn, reflect in a lower payment. Paying off debt on the credit report and insuring that no new debt goes on the credit report can pull a persons score up. I have worked with several clients who have pulled there score up and it may not be as hard as you think.

Many people don’t want to pay closing cost when buying a house. However, closing cost will be there weather the consumer likes it or not. Typical closing costs are 3% of the total loan amount plus third party fees which can run from $1800 to $2800. When buying a house, you should expect to pay this amount. If not, the company will just give you a higher rate to make up the difference. It’s much better to pay the closing cost as opposed to the high rate being that you end up paying more in the long run with the higher rate.

Renting has many benefits and so does buying. The one mistake people make when buying a house is moving too fast. Do not move too fast when making your decision. Just be sure your are ready for the responsibility that comes along with being a homeowner and you research your facts long and hard. Try to educate yourself on what you are getting into and don’t go with the first offer you get from a mortgage company. Check with about 3 mortgage companies to weigh your options. Having 3 companies pull your score will not cause your score to drop like many people think. If you are offered an adjustable mortgage rate (ARM) ask them what you can get in a fixed rate and compare the two. Hopefully these tips will help you out on your quest to achieve your goals