Are you ready to own your first home? Whether you’re a new resident of Richmond Virginia – and if you are, welcome! – or if you’ve finally made the decision to buy your own place, the biggest question on your mind is probably, “Is it cheaper to own or rent a home?” There are benefits to each, but we’d like to give you some things to consider.
Buying a house is considered the American Dream. You’ll find many who have passionate opinions on whether it’s cheaper to own or rent a home and those that argue the drawbacks of the opposite at length. While some argue that renting is “throwing money away,” others say that the commitment of home ownership is just too much. There’s one thing that most people agree on, however. Home ownership establishes a solid credit history and helps you build equity over time. When you’re considering your best housing decision, it’s important to have all the facts.
- Are You Able To Purchase A House?
- Do You Qualify For Financing?
- Will You Need To Relocate Quickly?
- What Up-Front Costs Are Involved With Renting vs Buying A Home?
- Will Your Needs Change?
- Will You Desire Changes To The House?
- How Much Maintenance Do You Want To Do?
- Crunching The Numbers In Richmond, VA
- Homes For Sale 240K-250K
- 10 Things To Know When Buying A House [Video]
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Are You Able To Purchase A House?
Buying a home almost always means securing a mortgage or home loan. One of the reasons many people remain in rental houses is because they think they cannot afford to buy a house. A home is the largest purchase most people make in their lifetimes. Long-term, renting a house means you’re always paying for a place to live, while owning a home means that you can pay it off, especially for those planning to stay in their forever home. While up-front costs may be higher to buy, such as a down payment, good faith offer payment, and initial move-in costs, the month-to-month costs of homeownership may be less.
Home loans, while a bit more difficult to obtain than before the 2008 housing bubble, are still within reach for many in Richmond. Many lenders may be able to pre-qualify you within a few days, giving you the knowledge that you’ll be able to secure funding for your house. Some would-be renters might find that their applications get denied on financial or other grounds, and that can influence a purchase decision.
Do You Qualify For Financing?
Some markets are tighter than others to obtain financing. If you have poor credit, you may not be eligible for a mortgage unless you have a hefty down payment – more than the industry average to twenty percent. In Richmond, VA, for example, residents who qualify for the VDHA First Time Home Buyers program may find it easier to purchase a home. Determining whether it is cheaper to rent or by a home may come down to whether or not you qualify for first-time buyer programs. You can even apply for home loans online and determine what you’ll need to do to qualify for financing.
Areas of Economic Opportunity in Richmond are specifically targeted to allow home ownership in economically depressed areas. In these places, the regulations for the Virginia First Time Home Buyers program are a little more relaxed. While your realtor may be able to help you find areas where you’re more likely to qualify for these loans, you can also use this site to check particular locations.
Another consideration for many potential home buyers is whether they qualify for a mortgage. Even those with bad credit may find that it is cheaper to own a home instead of renting one, and as they build equity, they may be able to renegotiate their house payments over time. Applying for a mortgage with bad credit doesn’t rule out home ownership, and even six months of diligent work can make the difference for many people.
Fixing their finances may be a reason that people chose to rent, although expensive leases can take a toll on paying off credit cards or saving toward a down payment. Even with less than perfect credit, many lenders have different options for home buyers. The Veteran’s Administration, for example, offers loans to active and retired servicemembers and their families, as well as surviving spouses in some cases. These loans have better terms than a traditional home loan. State and federal First Time Buyers programs, too, are intended to help home buyers get their foot in the door.
Will You Need To Relocate Quickly?
If you work for a company that transfers regularly, renting might be better than buying.
Keep in mind, however, that if you need to move suddenly for a job, getting out of your lease may cost you a bundle. Some rental agreements require an extra month’s rent, or even two or three, if you break the lease. Buying a home, even if you have to put it on the market to sell, may still be cheaper than renting in these cases.
Home prices in many areas of the country may only increase, and selling a house can help you build your savings if you have to relocate for a job. Although you may have to make a few more mortgage payments before your old home sells, these may be a lot less than paying break-lease fees to your landlord. Some homeowners even choose to rent out their houses while they’re on the market, which can cover the mortgage until you’re able to sell. Renters don’t have this option.
What Up-Front Costs Are Involved With Renting vs Buying A Home?
Determining whether it’s cheaper to own a home or rent one can come down to whether or not you actually have the available cash to make a house purchase. Although the rule of thumb for down payments is to have at least ten percent, some potential home buyers may be able to purchase their house with a down payment as little as 6 percent – or none at all.
Comparing the move-in costs of rentals to those of home buying, it may be cheaper to own a home instead of rent one even at the outset. Rentals typically require first and last month’s rent, as well as a deposit, damage deposit, or pet deposit for those with fur babies. Adding these costs up may match or exceed a down payment.
Potential home buyers may be able to drop their up-front costs even further. If you are in good standing as a borrower, consider requesting a lender credit. In this arrangement, the lender pays all or part of your closing costs for you. There’s a benefit to them for taking care of closing costs, too. The lender will raise your rate slightly above the current market rate but credits you the extra profit generated from doing so.
Will Your Needs Change?
Your living arrangements may suit your needs now, but look ten years down the road. Will you still be ok living in an apartment with noisy neighbors? Those around you may be good for now – but one loud or inconsiderate neighbor can make your haven a nightmare. Choosing your own home is an option for many after getting married or when planning for children. Deciding whether it’s cheaper to rent a house or buy one is an important part of future plans for you and your family.
Renting a home with more space than you need can cost you extra money. If you’re renting an apartment and decide to increase the size of your family, then you’ll be faced with another outlay of move-in costs. You may also not get the full deposit back from your apartment.
Investing in a home with space for future children is a common reason to purchase a home. Other changes can include accommodating elderly family members or blending a family together. Owning your own house can make it easier to stay in the home as your needs change.
Will You Desire Changes To The House?
Making space for more residents isn’t the only thing that homeowners enjoy. Painting the walls, remodeling a bathroom or upgrading a kitchen, and converting bedrooms into suites or home gyms are other common changes that owners make and renters cannot. Having the latitude to create your space to suit yourself tips the scales for many. While making the improvements in your house might cost a bit more, having a better quality of life is critical, even if you decide that owning a home isn’t cheaper than renting one.
Upgrades to a house, including finished basements, attic apartments, and swimming pools, can all add substantial value to the investment. If and when you decide to sell your house, you can make a nice profit if you’ve added value to the home. When you rent, you’ll be required to make repairs to your house or apartment, such as painting, carpet cleaning, and spackling. These come out of your pocket, making moving out of a rental more expensive.
How Much Maintenance Do You Want To Do?
Renting may be cheaper for those who aren’t handy at fixing things around the house. Most rental agreements include regular maintenance of plumbing, appliances that came with the house, and the heating and cooling systems. However, some people are adept at fixing and repairing things that break around the house, making owning a home still cheaper than renting. In fact, many homeowners say that even if they have to pay for repairs and maintenance, the overall costs month-to-month are still lower than lease payments.
Crunching The Numbers In Richmond, VA
Housing in Richmond is diverse and plentiful, with homes available in man price tiers. The job market here is diverse and strong, and our economy is robust, with emphasis on local businesses. Moving here has many advantages, and your ability to realize a return on your home purchase investment has serious potential.
For those deciding whether it’s cheaper to rent or buy in Richmond, here are some numbers that may help you decide. The average apartment rent in Richmond is over $1000 – and that’s increased one percent just over last year. House rentals are even more expensive, at over $1200 per month. For families that need extra space, renting an apartment may not even be an option.
The median home listing price in the greater Richmond area is $244,000. Using a mortgage calculator, an average home buyer will pay around $1100, if they are able to put ten percent of the home price toward the down payment. Better credit will drop your interest rates while choosing to make a smaller down payment will cause the monthly mortgage costs to go up. Your credit score, as well as your history of successful personal finance, can also affect your home price.
Other considerations for buying a home include Homeowners Association dues, if any, as well as insurance. These costs are typically bundled into rental terms, as well as profit for the landlord. Property taxes, too, are something that a homeowner needs to consider. Renters, while they may not have to put money aside for property taxes, will still have those costs rolled into their monthly rent, too. Homeowners that itemize income tax can deduct interest on a mortgage, and sometimes property taxes they pay.
Choosing whether to rent a house or buy one is an important step for many, and one that shouldn’t be taken lightly. Where you want to live, including the neighborhood and amenities, as well as the school district or proximity to a job, are all part of the equation. Determining if it’s cheaper for your to rent versus buy isn’t just comparing the cost of a mortgage to the cost of a lease. The upfront costs, the desire to build equity, and the flexibility to move without having to sell a house should all be taken into account.
When you’re ready, The Wilson Group can help you become a first-time homeowner and begin a new phase of your life. Visit us online for more information or give us a call – we’re ready to help you get into the home of your dreams.
Homes For Sale 240K-250K