2022 Boise Idaho Real Estate Blog

5 Questions to Ask When Considering Whether You Should Rent or Buy a Home

Main Idaho Real Estate Insights

This seemingly simple question does not come with a simple answer. Everyone has unique finances, different goals, and we all plan life differently. Check out these five questions to ask when deciding whether to rent or buy a home.

1. Can you afford to buy a home right now?

If you can’t, the other answer does not matter. Consider this, If the monthly mortgage payment was your only expense, buying would always be cheaper than renting a comparable house because your landlord is making money off of you. However, there are other costs that come along with buying a home.

The down payment is the largest up front cost. Typically this is going to range from 3% to 20%, depending on the type of loan you can get and its requirements. The Consumer Financial Protection Bureau has an online guide that helps you decide what size down payment will work best for you. There are also a number of programs out there available for first-time, rural, veteran or low-income home buyers.

Mortgage interest rates greatly impact the cost of buying a home. If you are fortunate to have a low interest rates, congratulations! But, interest rates have begun to climb again. It’s not as bad as it sounds – economists expect them to stay below the historic average for the foreseeable future. That being said if you can save a 1/4 point in interest rates now and buy more home and save money, your parents will think you are smart.

There are also quite often forgotten or unforeseen sizable closing costs. These can vary but normally cost you between 1% to 5% of the purchase price. Ask your agent if you should ask the seller’s to pay a portion of the closing costs.

Another factor to consider (particularly when deciding between two different locations) is property taxes. Canyon County taxes are higher than Ada County.

2. What does your credit look like?

It’s a good idea to request a credit report and find out what information is shown and if any errors exist. You can request a free credit report at AnnualCreditReport.com or from your lender. Lenders typically look for a credit score of 620 or higher for government-insured loan programs. For the lowest mortgage rates you need a credit score of 740 or above. Your Mortgage Professional will also be able to offer useful suggestions on who can help provide credit repair. Starting this process early will help you not only be prepared when the time comes to make an offer but also have the time to fix errors and get  the loan officer everything they need upfront so there are no surprises.

3. How long do you plan on living in the house?

If your answer is at least five years, buying a home will probably be more cost effective choice. Generally it takes five years to recover your mortgage costs and other closing costs.

If you anticipate relocating or other big life changes in the next five years, consider holding off on purchasing a home. While renting is not the fastest way to build wealth, it offers much more flexibility. There’s more certainty moving into a month-to-month rental situation than trying to sell your home quickly and at the price you require to break even. However, if you buy a home in a desirable area – particularly one with an abundance of young professionals or nearby universities –  you’ll have the option to rent your home out and turn it into another source of income possibly?

4. How is your preferred target search area trending for median sales price?

It’s impossible to predict exactly which way the housing market will move in the future, but it’s useful to get a general sense of where the market is trending. You may also want to learn more about Treasure Valley's Top Communities.

5. Be prepared for the upkeep and maintenance that come with owning a home?

Homeownership is rewarding but does come with ongoing maintenance and surprise repair bills. The Property Management company is not going to be there when the roof leaks or AC goes out. Smart home owners have some cash stashed away for emergencies and general home maintenance. If you have a yard in your home you will also have to mow the yard which is nice if you are in an apartment and never have to worry about that.

Final Thoughts on Buying a Home

Buying a home may require a good chunk of cash from your bank account; however, many people are surprised to find how relatively affordable it can be to buy a home. Evaluate your current financial situation and your goals as part of researching a purchase.

If you’re interested in pursuing homeownership, schedule a time to talk to one of our pressure-free Realtors who can give you a sense of the current market and trends, connect you with trusted lenders, help you work through your goals, and build out a tailored plan to help you achieve them.

Learn more about Boise Idaho Homes for Sale

Boise Idaho Real Estate Agent
Trey Langford

Posted by tlangford at 2/17/2019 8:30:00 AM

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