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Buy or Rent? Which is right for you?

Posted by kim carpenter on August 13, 2010
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Should you buy your first home or remain a renter?  It is a classic question.  How do you know if you are ready?  Can you afford a mortgage and all of the fees associated with securing a loan?

If you are pondering these questions, here are some items to consider:

  • Can you afford the home now and will you still be able to afford it in 6 months or a year from now?
  • Do you have enough savings for a down payment and unforeseen costs, like major repairs?
  • Are you credit worth?  Will you qualify for a mortgage?
  • Are you emotionally ready to put down roots and take care of a home?
  • Is your job going to change in the next few years?  Will your company relocate you to a different area?
  • Are you planning to get married?

There are many tax benefits to home ownership, such as a tax deduction for the interest on your mortgage and a federal deduction for your local property taxes.

You must evaluate neighborhoods closely, what is a fair market price for a home you are interested in?  This is where the expertise of a real estate agent comes into play, they can show you the “comps” or the prices that comparable homes in the neighborhood have recently sold for.

The decision to buy, especially a first home, is a life-changing experience but with the proper lender and real estate agent to guide you, it can be a dream come true.

For example, if you were to purchase the home below for $125,000 and you qualified for an FHA mortgage, your approximate monthly payment would be $831.  This is based on:

  • 3.5% downpayment of $4,375
  • Annual property taxes of $912
  • Annual homeowners insurance of $700
  • And includes an estimate of $80/month for private mortgage insuranceCrossing drive featured

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