Keep up on Real Estate...
Renting Vs. Buying
Renting Makes Perfect Sense...
For a Landlord! It is common knowledge that Renters pay a premium above a Landlords mortgage for Renting. What is amazing is that a Renter gets less rights than a Home Owner and Pays more Money! For instance, a renter is at the mercy of the landlord regarding who their fellow neighbor is next door. This can cause many issues if your landlord is not carefully screening the new tenants. A Renter can not have company or make changes to their home without first asking permission. A Homeowner can entertain at will and customize their home making it perfect for the family. Or how about when something breaks, a renter has to wait for the landlord to fix it, and often the fix is the minimum fix to get by. Whereas a Home Owner will take care to make sure its done right and may be able to upgrade the broken item with the savings they get from not paying a landlord. And don't forget all of the tax deductions and equity a Home Owner gets too!
What if I don't have any Down payment money?
First Time Homebuyers just starting to look today may have missed out on the Tax Credit, but that doesn't mean they don't get to benefit from the Low Down Payment Loan Programs that are still out there! If you are able to save a few thousand dollars, chances are you have enough to get yourself into a starter home. With an FHA loan program, you only need to be able to come up with 3% Down. This means $3,000 down could get you into a $100,000 home. Many Landlords require close to $3,000 down to just move into a rental. Of course if you can come up with more, you may be able to get a bigger home.
I can come up with the Down Payment but I'm not sure about my credit.
Most Landlords today pull some type of credit report on their tenants. Credit is used to qualify you for a Rental the same way it would be used to qualify you for a Home. Many Renters don't know their Credit situation but would qualify for a home loan. The FHA Low down-payment program discussed above also happens to have relaxed credit standards. Your middle score can be 620 or higher and you will qualify. A 620 credit score is not difficult to obtain, and if you are below this, chances are your Real Estate Professional or Loan Officer can tell you a few easy things to get the score up in a few months. Remember, your score will improve with just a little bit of thought and effort!
So If I want to Proceed, How do I know I can Save Money by Buying a Home?
Well lets go back to our Example of $3,000 down on a $100,000 home. The principal and interest payment would be about $567. Add in about $80 on Taxes and $80 on Insurance each month and your payment would be $727 per month. Your average 3 bedroom rental home rents for $850-$995 per month. So you can see you are saving anywhere from $123 to $268 per month. Not to mention that now you get to deduct interest paid off your taxes which typically can net a homeowner an additional few thousand in tax savings each year. If we add it all up, buying a home just saved you from $4476 to $6216 in a year. Plus I'll bet that your home is better than any rental you are going to find.
But I don't think a starter home will work for me...
A search on the MLS will tell you whats out there. There are many fine neighborhoods offering affordable housing. Plus with a little extra down or a second household income and you may qualify for a much larger home anyway. For our example, I searched the MLS for 3+ Bedroom Homes with 2+ Baths from $75,000 to $100,000 and found 440 Homes for Sale in St. Louis and St. Louis County. That's a whole lot of homes, and I would bet that you would probably find one that you liked. There are even more at lower and higher prices, plus, remember our landlord? Many First Time Homeowners became Landlords themselves by buying a 2-Family or 4-Family and let the renters pay their mortgage. Our FHA Low Down-payment Loan works for multi-family properties as well!
Ok So how do I get started?
Reconnect Realty can get you started. We can begin by sending you homes and getting you in touch with a Lender for a no hassle Pre-Approval. Once you are Pre-Approved, we can begin to physically go out an look at houses. Best of all, there is No Cost or Obligation for starting the process. Contact Us Today!
Courtesy of:
Steve Prane
Broker
Reconnect Realty
(314) 771-4222
FindStLouisHomes.com
