According to leading sources, rents are going to be going up yet again for 2016. The Wall Street Journal reports that rents are growing at the fastest pace in the past 10 years, growing by 4.6 percent in 2015 alone bringing the average cost of an apartment to $1,180. Developers who have been concentrating on the higher end of the market are seeing a decline in new home prices, and seemed to be inclined to lure younger and lower income people into homeownership with more affordable price points.
In fact, rising rents may have the effect of pushing more young people into homeownership before their landlord can gouge more cash per month for the same unit, hampering their ability to save for a down payment. But not every renter is ready to take the leap into homeownership.
There are five signs that you are ready to purchase your own home and leave the landlord in the dust.
- You have your financial house in order. You have at least 10 percent for a down payment on the average home in your area, you have a good credit score, and are not struggling to pay your bills. If you do not have a credit score of at least 690, cannot save money for a down payment, and have a hard time paying your bills, you are not ready for the financial realities of homeownership.
- In addition to having a minimum of 10 percent as a down payment, you have a cash cushion in case of an emergency. Remember, as a homeowner, if it breaks it’s on you to fix it. Plumbing repairs, HVAC repairs, roof repairs, you name it and it’s yours with no building super in sight.
- If you’re certain you want to stay in the area for at least five years, then buying a house represents your best bet for putting down roots. It can take years of making those mortgage payments to build significant equity in your home, so short timers should probably stick with renting until they’re ready to settle down.
- If you have a light debt load when stacked against your available credit, and you can easily beat your payments for student loans, car payments, and other needs you may be in a credible financial position to afford homeownership.
- If your employment picture is one of security, and you can credibly forecast your income for the next few years, buying a home would make good sense. If your employment picture is shaky, or you are in the moving around stage of your career, it is probably better to put it off.
If after reading this you have been able to say that you are ready to buy home, start researching neighborhoods, work on getting preapproved for mortgage, and get in touch with a real estate professional who can help you through your first time home buyer please. It’s not an easy process but it is in the end a very rewarding one.