Tuesday, July 17, 2012

Why rent when you can buy? Read this! It's great information.

Good morning everyone!

Christina Austin here with Team Texas to give you some valuable information regarding whether buying or renting is the best options for you. We are committed to being there for you regardless, whether it is buying, renting or even renting an apartment. We can do it all!

If you have tried to rent a home in the last 6 months in Houston you know it is a VERY competitive market. There are way more people trying to rent than there are homes available to rent. Often times, the landlord has the upper hand with multiple applications coming in at one time. One little imperfection on your credit, rental or back ground history and there is a chance that your application will be tossed aside for another. In this rental market, we as Realtors must be aggressive and we need your help to do so! If you are serious about getting into a rent home you must be armed with the required documentation, and be ready to apply when a new rental comes on the market that you are interested in because it could very easily be gone tomorrow.

So here comes the real question... Why would you rent when you can buy??? We hear it all the time and the number one excuse it get is "I want to save more money for a down payment/ closing costs."

Did you know that interest rates are at an all time low? Waiting and saving may actually be costing you money in the grand scheme of things.

Let me give you a couple examples:
Lets say tomorrow you decide it is time for you to take the steps necessary to purchase a home. You call your favorite Realtors, which of course is Team Texas, we refer you to a Mortgage Specialist who assists you with getting prequalified. After getting through the application process, they tell you you are prequalified for $180,000 with a fixed interest rate of 3.8% over the course of 30 years. We find you the absolute perfect house for $150,000. Your monthly payment would be around $1,220. This isn't an exact number seeing how there are a lot of variables that can change the monthly payment such as your down payment, homeowners insurance, mortgage insurance and tax rates... but that is a whole other blog. The mortgage calculator I used to get this number can be found here

Now lets say you decide to wait one year from now:
Everything stays the same except the interest rate goes up to 4.8%. We find you a home that cost $150,000. Similar to the one above. However, this time you monthly payment will be $1,310. A difference of $90 a month. Doesn't seem like much but over the course of 30 years there is a huge difference. Over the course of your 30 year loan in the first scenario you would pay $423,896.97. If interest rates go up just 1% in the next year you will pay $456,444.29. That is a difference of 32,547.32. 

How much are you saving in a month? Is it enough to justify waiting? Just a little food for thought. I can't predict the future but they can't stay low forever... and can't get much lower. 

This graph to the right shows how interest rates have changed in the last century. Can you imagine buying a home in the 80's when they were 18%? We are pretty fortunate with our current market.

Enough about interest rates... there are other advantages to owning your own home. For instance, your mortgage interest and property taxes are tax deductible. In addition to that, your home is an investment. You pay towards your mortgage and gain equity for yourself INSTEAD of your landlord.

I know some of you may be saying "Well, that's great and all, but I don't have ANY money for a down payment or closing costs." I am here to tell you that there are loan programs out there to help people just like you. Including the DAP (down payment assistance program), Bond 77, and USDA financing. There are certain screening criteria such as income and the location, but it could be an option for you.

Why let the opportunity pass you by without even trying??? Give us a call! We can help guide you through the process making the whole experience as easy as possible. 

~Christina Austin
Member of Team Texas
P.S - We LOVE referrals! If you know of anyone needing Real Estate assistance we would love to help.

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