With Tiffany Hollinger
September 28, 2020
Is NOW a good time to buy a house, is a question, I'm asked frequently. Even as, we are still dealing with the financial impact of Covid-19 the answer is, compared to renting YES!!!! Jokingly, I often respond “It’s time to fire your landlord!” There’s so many beneficial reasons to be a homeowner particularly in Northeast Ohio, where rent is high compared to owning
Even before the so called housing bubble of 2008, many people were hesitant to buy a home. Some of the reasons I’ve heard are, “I’m too old to buy a house”, “I’m afraid I will over spend”, “I’m afraid I can’t afford a home”, and the most common, “I’m afraid I won’t be able to keep up with the maintenance of a house”. Do any of these sound like you or someone you know? Well allow me a moment to put these fears to rest!
I’m too old to buy a house: Mortgage financing has nothing to do with age. What is taken into consideration is, income, debts (including student loans) and credit rating (credit score and report activity). So, no matter how young (over 18yrs old) or how old, there’s an ability to own a home. I will make note here, no matter your age, the first house do not have to be your forever home. Many people and families will buy a few different houses in their life time. Be it, because of relocation, change in family dynamics or income, etc. So, no matter the age, yes you can buy a house!
I’m afraid I will over spend: Majority of people who buy a house obtain a mortgage for the house, versus paying cash. When a lender extends a mortgage for a house, part of the process, is an appraisal will be done. The appraisal will assess the value of the house in its current condition. That means you will not over pay/spend for a house (unless you want to). The only caveat to this, is if someone pays cash for a property, an appraisal is typical not done, however, one can be requested to ensure to not over pay. So again, by obtaining a mortgage, which most people do, the worry of over spending is negated with an appraisal.
I’m afraid I can’t afford a home: Let me be clear, even before Covid-19 it’s economically better to own than it is to rent. Even more so, now that mortgage rates are at historic lows. According to Freddie Mac, the rate is 3.13% on a 30-year fixed-rate mortgage, and 2.59% on a 15-year mortgage. (Both numbers are as of June 25, 2020) Let’s exam, renting a 3 bedroom 1.5 bathroom, approximately 1000-1200 square foot house can rent for $900-1200 a month. This very same house, would be on the market today for around $65k-$100K. A $100k 30yr mortgage would be approximately $690 a month (including property taxes and insurance). That’s a minimum monthly savings around $220-500 a month. Thus very affordable!
I’m afraid I won’t be able to keep up with the maintenance of a house: While this can be a big concern for many, who may be use to renting and when there’s an issue, there’s a landlord or someone else to call to take care of maintenance issues. However, there’s many tools and tips that can address this concern. One example is, when purchasing a house, a home warranty can be purchased. So, when a maintenance issue arises, the warranty company is contacted, similar to your landlord, and someone is sent out to address the maintenance item (note that a deductible of $50-$100 per occurrence is required). Now, remember, owning a home is a savings of several hundred dollars a month, so there’s room for an occasional deductible expense.
So, to be very clear, YES, now is a time to buy a house and no matter the concerns that one may have regarding the process of buying or being a homeowner, the rewards far out weights the risk. Not to mention the long-term financial rewards of building equity. No matter what your rent payments are, they are going towards building equity for someone else. Why not let that person be yourself?
Any questions, more details, or tips, please contact me at AskTiffanyH@gmail.com or on Instagram at @Ask_TiffanyH, Financial Planner & Realtor.