Rent-to-own, or lease purchase, is a home-buying option that doesn't get a lot of attention,…
Buying a home is one of the biggest investments you will make in your lifetime and one that can bring you many benefits. Real estate is still a hot market, especially in our area of the country, but the stress of a hot market can pay you back tenfold once you find a home and start reaping the benefits of your new home.
Deciding when to jump into homeownership might sound intimidating, but we have some useful tips to guide you.
Money in Your Pocket
Face it, renting is expensive. RentCafe.com says that renting a home in Eugene will cost $1610 for an 892 square foot apartment. Why wouldn’t you apply that same monthly amount to a home you own? Investing in a home provides means you earn equity with each payment you make. Coupled with time and favorable market conditions, your home will pay you back in equity that can be accessed for home improvements, unexpected expenses, large expenses such as weddings or college, or simply to provide cash to put down on a new home.
The current interest rate for a 30-year mortgage is 5.9%. Years of record-low mortgage interest rates have given many a false sense of security, thinking that rates will always be historically low. The fact is that in the aftermath of Covid-19, mortgage rates are steadily rising. In February 2020, the average home mortgage interest rate was 3.81% and in February 2021, the average was 2.80%. While current rates are substantially higher than a year ago, there’s no guarantee that they won’t continue to climb. The time to buy is now!
Flexible Down Payments
There was a time when it was standard for banks to require a 20% down payment before financing a mortgage. While that standard still exists in many situations, there are far more options for buyers these days. Government lenders like Fannie Mae and Freddie Mac offer loans for as low as 4.26%. The Department of Veterans Affairs (VA) makes mortgages available to qualified beneficiaries for zero down. If you invest in your home with a conventional loan, your lender may still require a large down payment. If you can afford it, that’s not a bad thing. The more you pay down, the lower the interest rate for which you will qualify, and the less you will finance over the life of your loan.
And Most Importantly?
It’s yours! You can do whatever you want! Paint your house pink. Landscape it with the flowers, trees, and shrubs that you love. Make your garage bigger. Add a deck. And remember, with your home as an investment, everything that you do to increase its value goes right into your own pocket!
The Bottom Line
Stop dreaming of homeownership and just jump in with both feet! You have nothing to lose and everything to gain by giving up the home rental/leasing game and treating your own home as an investment.