Time to Buy or Rent?

With interest rates and prices at their lowest levels in years, deciding whether to buy now or continue to rent is a popular discussion.  While today's scenario is attractive,  potential buyers should be cautious about getting in over their heads by asking themselves the following questions:

1. How much can I afford to put down? Can I afford the monthly payment?

A mortgage down payment of 5 to 20 percent of the selling price is typical, but can vary depending on the situation. The size of the down payment will impact the monthly cost. Assess your financial health, determine how large of a down payment you can afford and consider if you can then afford the monthly cost.

2. What other debt do I have? Consider all of your current and expected financial obligations and ensure you are able to make all the payments. Aim to keep total rent or mortgage payments plus other credit obligations fewer than 35 to 40 percent of your monthly income. If you can’t keep payments below that, you may be better off renting for a while or searching for a more affordable home.

3. What is my credit score? Can I qualify for a good interest rate?

If your credit score is low, you may want to delay buying a home and take steps to raise your score.

4. How much will taxes, monthly maintenance or other fees cost? Owning a home means you will have to pay real estate taxes and other costs like insurance and maintenance. However, owning a home can bring tax savings at the end of the year. Remember to factor in these costs and incentives.

5. How many years will I stay here? Generally, the longer you plan to live in the home, the more it makes sense to buy. Over time, you can build equity and eventually even  pay off the mortgage and own it outright!

Nancy Puder is the broker and owner of SignatureProperties, a prestigious real estate sales and management firm in Arroyo Grande, CA.  You may contact her at Nancy@NancyPuder.com or (805)710-2415 Your calls are always welcome!