Renting gives you the freedom to move when you want, with none of the responsibilities of homeownership. But at some point, most people yearn for their own home. Buying a house is a good way to start building financial security. As you pay down the mortgage, you build up home equity, which is a valuable financial resource.
Of course, home prices and mortgage rates are not exactly working in your favor. Rates essentially doubled over the course of 2022, and median home prices have risen sharply as well. While the housing market is starting to cool down, the higher rates mean monthly mortgage payments can be a struggle — or even a barrier to homeownership altogether.
“Now that mortgage interest rates have been on an upward trek, coupled with the sustained and substantial surge in home prices across the country, housing affordability is a challenge for many prospective homeowners,” says Mark Hamrick, senior economic analyst for Bankrate. “But the fact remains that it pays to shop around for the best mortgage interest rate when the time does come to buy. All too many buyers only focus on the price of the home when there are other factors that also help to determine monthly payments.”
If you frequently find yourself wondering, “Should I buy a house?” you’re not alone. Deciding whether to rent or buy a home is a major decision. Here are eight signs that you’re ready to make the switch from renter to homeowner.
Rental prices have risen significantly nationwide, according to Rent.com, which tracks trends in the rental market. In 2022, the average rent on a one-bedroom unit climbed 27.13 percent to $1,721 year-over-year. Two-bedroom units rose 23.43 percent to $2,054.
Rising rent makes it harder to budget for monthly housing costs and save for other financial goals. When paying rent begins to feel like a bad investment and you want to build equity for the future, it’s time to think about a mortgage, says Bill Golden, a sales associate with RE/MAX Around Atlanta.
Golden says many renters are ready to buy a home once they are financially stable, motivated by pride of ownership and wanting more control over their residence. “If one or more of those is tugging at your heart, at least look into the possibility of owning rather than renting,” he says. “If you’ve seen your rent escalate significantly and you feel trapped, the balance may be tipping toward buying. With today’s escalating rental rates, your monthly outlay could be less on a purchase.”
Some renters can’t make the leap to homeownership because they don’t qualify for a mortgage. Low credit scores are a common reason why. A history of late payments or too much debt will hurt your score. One sign that you’re ready to buy a home is having a healthier...[READ MORE]