Why rent when you can OWN?
Stop throwing your money away on monthly payments, dealing with a landlord, and tolerating noisy neighbors in the apartment above you. Many renters believe buying a home is out of reach in today’s market, but it’s probably more affordable than you think, and a better financial move in the long run. Here’s 5 reasons why you actually can buy a home now, instead of renting.
Your salary qualifies you for a mortgage – You don’t have to make 6 figures to afford your own home! Do this simple equation: multiple your annual income by 2.5, and then add your down payment to that figure. Your total amount is the max mortgage you should shoot for. Make sure to also take into account taxes, insurance, maintenance, HOA’s, and repairs.
- You can afford to put down at least 3% – Many renters are intimidated by the thought of having to put down a large chunk of change as their home down-payment. However, home buyers can actually put down as little as 3% with conventional loans, and as little as 3.5% with FHA loans. Veterans can also qualify for VA loans with no down-payment.
- You have a little bit of debt – You don’t have to be debt free to get approved for a mortgage loan. In fact, lenders prefer to see a little debt being paid off in increments, it shows you are a responsible borrower. However, first time home buyers shouldn’t be looking to add a mortgage if their debt exceeds 7% of their monthly income.
- Your credit score is over 580 – It’s a common misconception that you need a perfect credit score, or a score of over 700 to qualify for a mortgage. While lenders may begin to question you as a risky investor if your score is under 700, you’ll be surprised to know that you only need a score of at least 580 to be approved for a FHA loan.
- A starter home (if not a forever home) is in reach – Purchasing a smaller home that might not quite check all your boxes isn’t a bad idea. Owning a home will help you build equity so that in time, you will be able to sell your home and afford a larger one that suits all your wants and needs. It’s a much better plan to buy a home that you know you can afford, rather than splurge on your dream home as a first time home buyer.
If you’re ready to start the search for your dream home, contact us virtually today!
Source cited: Realtor.com