Not Sure If You are Ready to Buy A Home?

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Real Estate

Not Sure If You are Ready to Buy A Home in St. Louis?

To Rent or Buy a Home in St. Louis , that is the question?

No, it's not a line out of the latest Shakespeare play, although it might be a good one? Maybe?   Anyway, we are going to discuss the renting vs buying pros and cons a home in St. Louis. After this discussion you will be in a better position to decide whether to rent or buy your next home in the St Louis, MO area (spoiler alert… It is a personal decision!).

As with most decisions to make there are pros and cons to renting vs buying a home. To start with let us look at the Pros of Renting a home in St. Louis.

1.       You are not responsible for maintenance, maybe just yard work. Check your rental agreement.

2.       You avoid the cost of repairs because it is the landlord’s responsibility.

3.       You can buy less expensive renters’ insurance.

4.       Sometimes it is more affordable than buying a home which means you can save for other big items such as the down payment to buy a home.

5.       You can easily move when your lease is up. No home to sell or rent.

Now the Cons for Renting a home in St. Louis.

1.       Less control over your living environment, painting and knocking down walls may be a problem for the landlord.

2.       Your rent can increase.

3.       Depending on your desired neighborhood or area rental rates may be higher than mortgage payments.

4.       The landlord may decide not to renew your lease which means you incur moving cost plus the costs associated with the new rental property.

5.       The landlord may be slow in making repairs or maintenance.

6.       You may have to find a new home for your pet.

Now the Pros for buying a home in St. Louis.

1.       You can pretty much do what you wish with your home.

2.       There are many financial benefits both short and long term.

3.       Depending on your desired neighborhood or area, it may be more affordable to buy than to rent.

4.       If you have good credit you may get a lower interest rate on your home purchase. This may make the monthly mortgage payments more affordable.

5.       You may be able to deduct mortgage interest paid to reduce your taxes. Check with a tax professional to see what you are eligible for.

6.       Equity – the difference between what is owned on your home and what it is worth. Each monthly payment made builds your home’s equity. Equity also builds through market value appreciation.  A benefit of building up equity is that in the future you may be able to apply for a home equity line of credit to be used for a lot of things. Things such as a new car, home improvement, paying off high interest loans or unexpected expenses.

And the Cons for buying a home in St. Louis. 

1.       Appliances break down and needs to be replaced. You may shell out some big bucks depending on repair or replacement costs.

2.       If you received a job offer in another area and need to move.  In most cases you would have to sell or rent your home.

3.       You will need down payment and closing costs to buy a home. Ideally 20% of the cost of the home that you are buying. This will remove the PMI (Private mortgage insurance) on the mortgage. The PMI covers the lender in the event you default on the loan. Additionally, a down payment of 20% or more down can help you get a lower interest rate which in turn reduces the monthly mortgage payment
If this seems difficult to save the 20%, you may have other options such as putting down a smaller down payment which would incur the PMI or government sponsored loans. Check with your lender to decide which is best for you.

4.       Closing Costs – The closing costs may include lender fees, appraisal, inspections, title work and home warranty to mention a few. Depending on your desired neighborhood or area and market conditions you may be able to ask the seller to pay for your closing costs or your lender can include them in your loan. Your agent or lender will be able to advise you on this.

5.       Unanticipated Expenses – this would be utility connections, moving expenses,  or any repairs needed prior to moving into your new home.

6.       Renting does not build your equity only your landlord’s.

In addition to the considerations outlined here, the cost for both renting and buying can vary wildly depending on the neighborhood or area you decide to live. So, ask yourself the following:

1.     Do you have enough savings to cover closing costs? If you are considering buying a home, chances are, you have enough saved up for a down payment. But before you make the decision to buy, you will also need to make sure you have enough saved to cover all the closing costs associated with buying a home (like the appraisal and inspection).

2.     How long do I plan to stay in the property? Ultimately, you want buying a home to be a smart investment; you do not want to lose money. And to not lose money on the deal, you typically need to stay put for two to three years—so make sure you are willing to settle in for at least a few years before you buy.

3.     Are you prepared for maintenance? When you rent, your landlord takes care of home maintenance—but when you buy, that responsibility falls to you. Before you make the decision to buy your own home, make sure you are ready to tackle all the home maintenance projects—and costs—that come with owning a property.

4.     How stable is your job? Are you planning on getting a big promotion soon or looking to jump ship to another employer. How is the economy affecting your job, no lay offs on the horizon hopefully. Any merger talks with another company?  These things and others can affect the stability of your job.

5.     Do you need to build or rebuild your credit? If your credit is bad, you may not be able to obtain a loan, or the monthly payments would be more than your debt to income ratio. Check with your lender about your debt-to-income ratio.

If you answered Yes to any of these questions, maybe you should strongly consider renting for the foreseeable future. Simply put buying a home is not always the right decision for everyone. In the end deciding to buy a home is a personal decision and only you can choose when and if it is right. You owe it to yourself to consider all your options first.

Once you do, your answer to the To Rent or Buy a Home question will be clearer.

Still undecided? Check out my guide, “ Does Owning A Home Make More Sense Than Renting?

It is yours FREE for the asking. Just click on the link above and request your copy Today. Why Wait?

Make it a great day!

 Bob Weibrecht  HeyBobStL