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DRAPER -- With low interest rates and all kinds of attractive government incentives, is now finally the right time to switch from renting to buying a home?
Steve Johnson is the branch manager for Raymond James Financial Services in Draper. He says if you can afford it, now's a great time to take that plunge. But whether you can afford it is a very individual question, dependent on many variables.
"Are you in a position to have that down payment available and savings? You're going to have to have a certain amount of savings," Johnson explains. "What is the mortgage payment going to look like, depending on the size of the home and the amount of debt that I'm going to have to take out?"
And that's just the start. In other words, Johnson says deciding to move from renting to buying is very much a cost-benefit analysis. For example, you do have benefits to renting:
- You don't have to worry about who will do repairs or maintain your home.
- You don't have up-front costs like a down payment or closing costs.
- When you want to move, you simply find a new place to rent and you move, no selling or closing process.
But buying also has its benefits:
- Federal tax laws strongly favor people who own their own home
- You are more able to customize your home with paint, furnishings and other individual choices.
- You can borrow against the equity in your home as a future source of cash.
There are other factors that will affect how much buying a home will cost you. Among the things to consider are property taxes, the cost of homeowners' insurance, utilities, and even what you'll need to buy to furnish the home, from appliances to decoration.
But Johnson says one of the most important factors to weigh in is your employment situation. Are you in a stable job, or are you likely to be moving in the near future? If your job is not one you can consider stable, buying a home may not be in your best interest right now.
Finally, getting preapproval for a loan can help you know what you can afford. Johnson says a mortgage company, financial planner or real estate agent can provide you with a checklist that will help you work through the number-crunching to see if you're in the market for making the move.
E-mail: bbruce@ksl.com
