Many people are opting to delay buying a home in favor of renting in the short-term. However, the rental market is shifting.
According to the New York Times, rental vacancies are at their lowest point in 20 years, while rents are near their peak. Business Week notes that rents increased faster than income in all of the 25 largest metro areas over the past year. San Francisco and Oakland saw some of the largest year-over-year increases in rents according to Trulia, and rents overall have risen 6.3% year-over-year nationally. The Albuquerque area is also seeing increases in rental occupancy rates and rises in rents, according to Albuquerque Business First. Higher occupancy rates mean fewer apartments are available for rent. Due to limited supply, landlords can often charge higher rents and renters have fewer apartments from which to choose.
If you are thinking of purchasing a home or starting to wonder if renting or buying is more cost effective, consider these factors.
Length of Residency
If you expect to stay in a home for only a few years, it may be less expensive to rent. But if you intend to stay 5 to 7 years or longer, it’s generally more cost effective to buy a home.
Purchasing a home usually requires a down payment. If you haven’t started saving, develop a household budget and a savings plan. Most lenders require a 10-20% down payment; SLFCU only requires 5-10% down.
Your Financial Health
If you apply for a mortgage, your financial standing will be assessed to determine if you have the ability to repay the loan. Two important numbers to keep in mind are your debt-to-income ratio and credit score.
Insurance, Taxes, and Fees
Homeowner’s insurance is more expensive than renter’s insurance, and homeowners also need to consider property taxes. Depending on your neighborhood, you may also need to pay Homeowner’s Association fees.
Emergency Savings and Home Maintenance
It’s a good idea to have emergency savings before you buy a home, since you will be responsible for regular maintenance and unexpected repairs.
SLFCU offers a variety of mortgage options, including solutions for first-time home buyers. No matter where you are in the process of purchasing a home, SLFCU can help. Learn more or call 505.293.0500 or 800.947.5328.
HOME BUYING RESOURCES
We offer special solutions for first-time home buyers.
- Get an instant personalized quote (no personal information is required).
- The HomeAdvantage program gives you access to home listings and a rebate at closing.
- Use Savvy Money to help you put together a savings plan.
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