Renting vs. Buying

While renting is a great option if you move around a lot and aren’t sure about living where you are permanently, it may be costing you over time. Here are some common myth’s about renting and why evaluating buying may be the best option!

1. You don’t pay a mortgage when you rent
This is both true and false. While you as a renter aren’t making payments on the complex, the landlord does incorporate these payments into the tenant’s bills.
What exactly is a mortgage? A mortgage is the payment you make (with interest) to pay back the bank on the loan used to purchase a home/property. With each mortgage payment, you become one step closer to lower monthly payments, as you won’t owe the bank anymore. As the debt to the bank goes down, the value of the equity (house/property) increases.
So why pay the landlords mortgage and increase his equity? Have the equity work in favor of YOU!
2. Renting is cheaper than buying
On the surface, this looks true. You pay a monthly rent only for as long as you need to live there, at any moment you can pack your things and leave. However, what if you don’t plan on leaving your complex any time soon? You might be in an apartment just as long as you’d be in a house! Is the convenience of not owning worth the cost?
The % of income needed to afford the US median rent is 29.2% when the income needed to afford the US median home is just 15.8%. This is significantly lower.
The extra income saved from buying a home is that new car you wanted, an extra-long vacation, or some extra cash in the rainy-day fund!
3. It isn’t a good time to buy; prices keep going up
Actually, it’s a great time to buy! While, there have been more affordable markets in the past, it sadly isn’t the past. Since the 2008 housing market crash, 2017 is one the best markets we’ve seen!
Since many people are buying homes, availability decreases, increasing prices even while interest rates stay around 3.5%. However, Arbor Homes has plenty of lots available and by building, you get exactly what you want for a great price and low rate. The national rates would have to increase by 145% for renting to be the more affordable option!

4. I can’t afford a house / My credit isn’t good / I can’t afford a down payment
These are all common phrases when someone is asked about buying. Let’s expand on all of these.
Why can’t you afford a house? No cash in the bank? Houses too ‘expensive’? This is said all the time and most people don’t take the time to look at their situation. After you assess your basic expenditures, you may find that there are things to cut back on to help afford a home. Or after you see what the monthly payments would be notice that it’s a lower monthly payment than renting. Whatever the case, sitting down with someone and looking over your situation may reveal some hidden information.
What is good credit? The majority of the United States say that good credit is around 780. And while 780 is a great score, you don’t have to have it to be approved for a house. 54.7% of the US approvals are approved at 600-749 credit scores.
Down payments don’t have to be as high as you’d expect. You may think that you need to put a 15-20% down payment on your house. FALSE. You only have to put the minimum or above what you are approved for and many programs will allow as little as 3%! The more you put down at first, the less you have to pay back but this also is less in the bank and you need to be careful not to spend your rainy-day fund.
While renting is a great temporary option. It may be time for you to assess whether or not you should buy your first home.

Posted: 5/30/2017 by Stephanie Henthorn | with 0 comments

Prices, plans, and terms are effective on the date of publication and subject to change without notice. Square footage shown is only an estimate and actual square footage will differ. Depictions of homes or other features are artist conceptions. Hardscape, landscape, and other items shown may be decorator suggestions that are not included in the purchase price and availability may vary. Plans to build out this neighborhood as proposed are subject to change without notice. 3D floor plan rendering is for illustrative purposes only and represents a concept of a standard model of this home and may not represent the home that would be available for purchase at the purchase price shown. The rendering may represent the base model of this home without any options or upgrades, or may depict options, upgrades or features that are available at an additional cost. Furniture placement and flooring is artist's conception and is not intended to show specific detailing. Floor plans are the property of Arbor Homes LLC.