Is Now the Time to Buy a Home?

Across the country, a similar messaging is being repeated over and over again. Rent prices are on the rise, and renting becoming unaffordable for many people.

Renters need to ask themselves a question. Is now the time to buy a new home?

Owning a home isn’t for everyone, but in many cases, the answer may be, “Yes!”

• Rents on the Rise
  • Housing is becoming increasingly unaffordable for many renters. Recent data released by the Harvard Joint Center for Housing Studies shows that half of all renters (20.7 million) spent more than 30 percent of their income on housing in 2013 – and costs have only continued to rise since then.
  • Worse still, about 11 million renters spent more than half their income on rent and utilities. That’s a 37 increase from 2003.
  • In an ideal situation, housing should cost less than 30 percent of your income. But that’s just not the case.
  • The middle class seem to be getting hit the hardest. Families with incomes between $45,000 and $75,000 seem to being feeling the pinch more than ever. Between 2003 and 2013, 72 percent of families in this income bracket spent more than half their income on housing.
  • On the flipside, though, only about 25 percent of homeowners (19 million people) spent more than 30 percent on housing, which is the lowest amount in ten years.
• The Case for Owning Your Home
  • There are plenty of misconceptions about buying a new home. Let’s clear a few of those up.
    • Myth 1: You need to save a 20 percent down payment.
      • Not true! Conventional loans are available for as little as 5 percent down and FHA loans are available for as little as 3.5 percent down.
    • Myth 2: You have to have perfect credit to get a mortgage.
      • While mortgages aren’t as easy to get as they were several years ago, perfect credit is not a requirement for every loan type. For FHA loans, your FICO credit score can be as low as 580 and still qualify for a low down payment mortgage.
    • Myth 3: There’s no value or long-term wealth in housing, especially since the recession and housing crash.
      • According to a Federal Reserve study in 2014, the average net worth for a renter is $5,400. The average net worth of a homeowner is $194,500.
  • For many renters, buying a home is more of a reality than you may realize. Former renters across the country are saving money each month as homeowners. Finding the right mortgage and the right home isn’t always easy, but for many renters, it may be worth the effort