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For Your
Clients: In 2010: Rent or Buy A Home?
RISMEDIA, June 14, 2010--First time home buyers
have a lot to consider this summer when making
the decision to rent or buy a home: interest
rates are at all-time lows, there's still plenty
of housing stock and prices are at or near their
lowest in years.
Still, deciding whether to buy a home or rent an
apartment can be a complicated decision. How do
you know what's right for you? Potential buyers
should ask themselves several key questions
before making this important decision.
1. What will monthly costs be, and can I
afford the payments?
Keeping mortgage payments under 30
percent of your monthly income is a good rule of
thumb. If you can't keep mortgage payments below
that, you may be better off renting for awhile.
2. What other debt do I have?
Total rent or mortgage payments plus credit
obligations should not exceed 35 to 40 percent
of monthly income.
3. What is my credit score? Can I
qualify for a good interest rate?
A high credit score indicates strong
creditworthiness, and that qualifies you for
better interest rates on a mortgage. Maxing out
on your credit lines and paying bills late will
lower your credit score. The impact of a credit
score on interest rates can be significant. For
instance, a borrower with a score of 760 could
pay nearly two percentage points less in
interest on a mortgage than someone with a score
of 620. Lower interest rates also mean lower
monthly payments. If your credit score is low,
you may want to delay buying a home until you
can improve your score.
4. How much will taxes, monthly
maintenance, or other fees cost?
Owning a home means you'll have to pay
real estate taxes and other costs like insurance
and maintenance. On the other hand, owning a
home brings big tax savings at the end of the
year. As a renter, the owner pays those costs
for you.
5. How many years will I stay here?
Generally, the longer you plan to live
someplace, the more it makes sense to buy.
You'll build equity in your house and its value
is likely to increase over the years. |
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GAGE REALTY
