Should I Buy a Home or Keep Renting?

 

The home-buying experience is full of complex and unfamiliar terms: equity, escrow, PMI, and LE-CD. It's the sort of language that can make the process that much more confusing—especially if you've been renting most of your life. 

That being said, there are plenty of great reasons to take the leap into homeownership. Although the process may seem complicated, we've put together this primer to help you understand the ins and outs of the mortgage process and show you how easy it can be with the right lending partner.

 

How a Mortgage Works for You

Let's say you've found your dream home, but the price is more than you can pay out-of-pocket. Don’t worry—that’s the case for most homebuyers.

This is where your BayCoast loan officer can help. Once you’ve found your perfect home, we'll walk you through a variety of payment structures and terms, based on your specific needs, and hone in on a down payment that fits your budget. After your mortgage is approved, we'll loan you the money to buy your home. 

 

How You Could Benefit From Homeownership

Every month you pay rent, you're not just paying your landlord’s mortgage; there’s also added money built into each payment to help the homeowner cover unexpected repairs, expenses, and renovations. 

  • Why not invest in yourself? Housing values are on the rise, with the median home price increasing to $229K, according to Zillow.com . Each time you make your mortgage payment, you lower the amount you owe the bank—and basically, buy little pieces of your home over time. With that, you’re building what's called home equity.
  • Assuming your home's value increases (or at least stays the same), that's an investment in yourself. Barring exceptions, such as the market fallout from a decade ago, U.S. Census data shows that housing prices have risen almost every year—sometimes at double the rate of inflation.

Plus, you may be eligible for a variety of tax breaks associated with homeownership, including mortgage interest deductions and renewable-energy tax credits. Speak with a tax professional for more information.

 

Home Equity Can Strengthen Your Financial Position

When you're looking to make a few renovations around your home, start your own small business, or even buy a vacation home, the equity you've built can make you eligible for additional lending opportunities like home equity loans and home equity lines of credit. Plus, every on-time payment strengthens your credit rating and lengthens your credit history.

This is exactly why your landlord owns your home—as a homeowner, the rent you pay gives him or her all these great benefits. Of course, this comes with advantages to the renter as well—like free property repairs. However, when you take out your own mortgage, all of the financial benefits become yours.

 

Choosing the Right Terms for Your Mortgage

The 30-year, fixed-rate mortgage is probably the most common housing loan on the market today, but there are many other options available. Based on your financial preferences and long-term goals, you might choose a 10- or 15-year fixed- or adjustable-rate mortgage.
    
In a fixed-rate mortgage, the interest rate is set when you take out the loan, and it won’t change over the life of your mortgage. 

The interest rate associated with adjustable-rate mortgages may vary over time, since it's based on an independent index. These indexes simply measure the overall state of the housing market and help our loan officers determine an appropriate interest rate at the time you are taking out a mortgage. After a set period in which your rate remains the same, it is re-evaluated according to the index, and it changes accordingly. So, if rate indexes go down, your mortgage payment will, too.

 

How the BayCoast Mortgage Team Can Help

Although renting may fit your current needs, we'd love to walk beside you on your journey to homeownership. Homeownership doesn't have to mean a large, expensive family home—mortgages are available for condominiums, townhomes and starter homes as well. A BayCoast Mortgage specialist can help you compare terms, rates, and monthly payments to see what’s best for you.

Let us show you how easy it is to begin building equity today. To get started, contact a BayCoast Mortgage lending professional , or call 877-466-2678, to see how you can make the switch from renter to homeowner.