By: Julia Bellotti
Buying a house (or even thinking about buying a house) is scary. No doubt about it. You’re about to spend hundreds of thousands of dollars on a place to live for perhaps the next 10 years of your life. But NEVER FEAR! We are here to help so you can decide whether you should rent or buy.
I started off by asking friends why they rent – here’s what they said:
Are you sitting there nodding your head? Sound like you? It definitely makes sense, and some of these are great reasons to rent instead of buy. However, I attended a presentation by real estate agent Laura Pimentel to find out what was really true about renting vs. buying. The following is what she said about the true benefits and risks of buying a house:
Benefits of Owning a Home:
Risks to Buying a Home:
Okay, so that’s all fine and dandy, but that doesn’t really cover how people afford to buy a home.
How do they do it?
I spoke with a former roommate of mine who is now starting the process of buying a home with her boyfriend. She said they initially weren’t considering it until they heard about friends buying a home and thought “if they could buy a house then we could too.” They then sat down with a lender to figure out what they could afford and were pleasantly surprised.
Everything my former roommate told me echoes the advice Laura Pimentel and her real estate partner Alex DeLorme gave. Both recommend talking to a lender even before you start thinking about buying. A lender will give you solid advice by taking a look at your current financial portfolio, including:
In general, lenders want to see that your total monthly debt – including your potential mortgage – does not exceed 43% of your gross (before taxes) monthly income. There are many federal and state home buying assistance programs that you can look to based on your occupation and/or income level. Home buying assistance here doesn’t just mean they’ll chip in some money – in some cases, you won’t even need to put any money down for a down payment. Check out a sampling of these programs here.
Even if you’re not in a situation where you can buy right now, it’s still a great idea to speak with a lender and put together a plan of where you want to be in the future. Taking control of your finances is an incredibly adult thing to do and you’re already doing great by consulting The Adult Dish!
One last piece of advice –
My former roommate says the most helpful and educational advice she received was simply through talking with other people who were going through the process or recently went through the process. So if you're considering buying a house, I suggest you try and do the same!
How about you? Why did you decide to rent or buy your home? Tell us in the comments!