Every person at some time in their life has to answer the question: Should I purchase a home or rent a home? Home ownership can appear intimidating and overwhelming if you are not familiar with the process or if you’ve never had a mortgage. Most renters assume that they are not able to purchase a home because they don’t have the money or the right type of job. Whatever your thoughts are about renting versus owning a home, we want to help you overcome any fears or false assumptions that could be holding you back.
In reality, owning a home is that it is both easy and beneficial. If you plan on living in a home for more than 2 or 3 years, generally it makes sense financially for you to purchase a home instead of renting. (We acknowledge that there can be other variables. Talk to your local Realtor to discuss your particular situation, or if you are in the Colorado Springs area, give me a shout: Susanna Haynie, 719-321-0800).
Related Reading: Tips for Finding Rentals in Colorado Springs
Renting Vs. Buying
To start: here is a super fun tool that allows you to play with numbers to see how renting versus buying impacts your wallet in the long run. I recommend starting with what you are currently paying in rent, or what your typical monthly housing budget. Enter that info in the “rent” field, and then play with the purchase price of a house. This will show you how long you have to live in your house before reaping the financial rewards of owning a home. I propose looking at what the purchase price of a home should be if you were to live there 3-5 years. This will help you start with an initial budget idea.
Usually once you have been in a home for 3-5 years, you start to quickly realize the financial gain in home ownership (depending on the purchase price of the home). Some additional benefits of home ownership can be:
- You have control over the style and design of your home so that it reflects your taste and personality.
- Fido, Fifi, and Tigger – or any other pet you have – can stay with you! Pets allowed in your own home. No pet deposits.
- No deposits of any kind. No need to worry about coming up with 3 months of rent or wondering if your landlord will find ways to keep your deposit when you move out.
- You never have to worry if proper maintenance is being done. As a homeowner, you have full control of the condition of your home and you can make sure that your home stays in tip-top shape. No waiting for approved maintenance men to show up when they feel like it and at inconvenient times, or not at all.
- Avoid unplanned rent or utility expense increases. If you have ever rented, you know that you can receive a notice that additional fees will show up on your next rent/utility bill at any moment. A yearly lease can quickly jump up so much that you have to scramble to locate a new home before the lease expires. Or in an apartment complex, your monthly bill arrives with sudden “additional” fees that you have no control over.
- No worries that your rental home will be sold out from under you. This is a very real possibility. It is disheartening to finally become established in a neighborhood and feel at home, only to find out the owner has decided to sell and you have 45 days to pack up your family and find another home.
- With smart buying and planning, you are creating an asset that can help you achieve long-term financial goals.
- Develop an additional stream of income by renting. Once you have lived in your home for a few years, consider adding your home as part of a bigger retirement plan. Your home can be used for rental income, whether it is short-term or long-term. Using your home for passive income can be an exciting prospect that I would love to explore further with you.
Top Four Excuses Debunked
Now that you see how your wallet will love you in the long run for purchasing a home, let’s look at the top 4 excuses why most people think they can not become a homeowner.
1. No Money For A Down Payment
So you don’t believe that you have enough money for a down payment? Can you come up with at least $1000? Then you are in luck! In Colorado, there are several down payment assistance programs available for individuals and families who do not have the extra cash for a home purchase. As long as you have a $1000 in the bank, a two year work history, are a first-time buyer OR have not owned a home in the last three years, then you most likely qualify for down payment assistance. There are several programs available for low to middle-income families who want to become homeowners.
2. I Have Bad Credit
We all have had stumbles and hiccups in one way or the other. Don’t worry if your happened to negatively impact your credit score. A caring and knowledgeable loan originator can assist you with repairing your credit, or point you to someone who can. All it takes is 2-6 months to bring your credit score to at least 640 and enable you to qualify for a mortgage. With a little patience and planning, in no time you will be ready to start the home buying process.
3. I’m Locked Into A Lease
Are you eager to purchase a home but still have several months left on your lease? Here is a solution: Your loan originator or realtor will be able to pick a closing date that enables you to have two months in your new home without a mortgage payment. Use that money saved to pay off your lease. Also, consider the time it takes to close on a house. A well-planned closing date coupled with the normal closing process, it is possible you could have 2-4 months from the time you submit an offer to when you have to make your first mortgage payment. Your monthly mortgage payment is likely to be less than your rent, plus you can have two months in the new house without a payment at all.
4. I Haven’t Been At My Job Very Long / I’m Self-Employed
The key here is two years. As long as you have been at the same TYPE of job for two years, then you can apply for a mortgage. You do NOT need to be at the same location or company, but need to have been in the same field of work for a minimum of two years.
If you are self-employed, you need a minimum of 2 years worth of tax returns showing sufficient income. Depending on your situation, it may require not taking all the deductions available to you as a business owner so that you can show appropriate income. Talk with a lender to determine what income you need to show for the type of home you want to purchase.
I hope this shows you how easy it is to become a homeowner and also helped you see the many incredible benefits of home ownership, including providing a stable place to raise a family, or whatever dreams you have! With a little planning and preparation, you could be ready to purchase a home within two months to two years!
Need help making a good plan? I’d love to sit down with you and develop a strategy that leads from renter to homeowner, all the while easing up on your wallet. Let me help you Live Your Dream. Email (firstname.lastname@example.org), call or text (719-321-0800), or click the picture below to schedule your free 30 minute Q&A call: