First off, congratulations on thinking about buying instead of continuing to rent. As a landlord, I certainly want to have a supply of renters, but I’m always happy when one decides to own their first home. I’ve even helped them before. I ended up selling my first rental property to my first tenant after he and his wife repaired their credit score. They got a great price on a house and I made some money and it felt great!
Consider why you want to buy a house. Is it for financial reasons? A few benefits to owning your home are:
- The monthly payment for a mortgage is often less than the monthly rent for a similar house
- You have pride of owning your own home
- You can do a lot more with decorating/modifications than would be allowed in a rental
- You get a tax benefit when paying property tax
Downsides to home ownership include:
- You have to pay property tax and insurance
- You have to fix broken things yourself, or pay for it to get done
- You have a mortgage (usually) and you can’t miss paying it
- It takes time to sell the house, so it’s harder to relocate
- You probably will have a lawn you have to take care of and snow to remove if you live in the North
- You have to have good credit to buy your own home…at least better credit than is needed for many rentals
If you’ve made the decision to buy, then is now the right time? Interest rates play a big role in peoples’ decision to purchase. Big companies are buying up homes right now and that is keeping prices high. Some people are waiting for the market to cool off before buying.
It hasn’t been a buyer’s market for a long time. It’s very unlikely that the bottom will fall out of the market and house values will drop so much that you will get a huge benefit from waiting. It is unlikely that interest rates will go down soon. Sure, the market will cool off sometime, but it’s just not going to drop that much. Consider how much money you are throwing away every month by renting. Is that really worth the lower housing value you are hoping for years in the future.
If you are financially ready, now is the time to buy your house. Don’t wait to time the market. You will never feel like you got it right. You are looking for a long term home and you are not doing this as an investment. Saving a few bucks by waiting might be for the investment properties, but not for you. Now is the time to buy. Go out there and get your dream home, tiger!
