When’s the Right Time to Switch to Buying from Renting?

Concept of home ownership

Concept of home ownershipIf you’re still renting and considering buying your own place, you probably think if it is the right time to enter the housing market. This is common for many first-time buyers, as a home purchase is a major financial commitment. When determining if you’re ready, you need to look at your current situation, as well as your rental expenses and possible costs associated with buying a home.

Altius Mortgage Group and other mortgage companies note that the main benefit of buying is having a place you can call your own (without having any restrictions from the landlord). It can also help you build equity and get tax deductions. Renting, on the other hand, is a good option if you can’t afford a new house or don’t feel like settling into the same place for years. 

Know the costs

Buying a home comes with a larger payment than renting and you need to come up with a down payment. To find out whether renting or owning is better, look at your current rental expenses and potential mortgage payments. 

Amount you can borrow

The amount of mortgage you can loan will depend on your debt-to-income (DTI) ratio. In most cases, lenders don’t want your total debt to go beyond 36% of your monthly income. They can then give you an estimate, but you shouldn’t forget to assess how much loan you are comfortable paying. The way you manage your debt and finances will play a role.

Receiving tax deductions

When you buy a home, a good portion of your salary is likely to go through mortgage payments. But the good news is you may be able to get a tax break, which is not available when renting. It is best to get an idea of how much tax you will save, as the difference may offset higher mortgage payments.

If you believe that now is the right time to buy a home, contact a reliable lender to know more about your options and start preparing for the loan application and buying process.