Leasing instead of Buying

Published by cravat | Filed under Buyer / Seller Tips, Miscellaneous, Real Estate, Shout Outs, Uncategorized

A few people are not usually cut for owning a property for a couple of reasons. Let us check if you are one of these people who would rather lease and not buy. Here is some list to tell you:

A Bad Credit Record

If you intend to purchase a house with a bad credit, you should have it fixed before applying for a mortgage. Several late payments will automatically disqualify you from getting hold of a loan.

Ratios of High Debt

Carrying a high debt ratio only means you do not qualify for the loan. A lender think about two ratio: the front and back end. Front is your loan payment adding up the taxes and insurance charges and divided by your monthly income. Back end is adding up your monthly loan payment before dividing that loan amount by your income. When you carry a fifty percent debt ratio is a high ratio. If you can find a lender that is keen to finance such loan, you will no longer be able to put food in your mouth.

Unsteadiness of your job

A question to ask yourself, is your job secured? For instance, having a mortgage payment of $3,000 is a lot. Nonetheless this loan was very affordable if you are having an annual salary of $120,000. But you will not know how far you will have this job, the moment you lose a high paying job could also mean a home foreclosure.

Check your job if it is in jeopardy. Is the company laying-off?  If so, how fast can you get a new job? Compensation when you are unemployed is not enough to cover your monthly loan payments.

What about relocating? Are you likely to transfer to another town within a year or two? If you will need to sell because of job relocation, your investment price should increase for at least ten percent to handle the cost of reselling. If not, you would totally lose money when you sell. When you have intention of purchasing a property you should completely plan of staying for a time.

Issues on Repair

All properties require regular maintenance. Not all homeowners wants to engage in home maintenance projects. Plus, a lot of first time home buyers can simply not afford to employ a license inspector to check and a professional to repair areas that needs immediate attention. Professionals suggest that you save at least five percent of the contract price to cover repairs when you purchase a home.

Leasing is considerably less in cost

If your monthly loan payment would be more than twice or triple the amount you pay for the rent, it does not make any sense financially to purchase.  For example, if it would cost you $2,000 a month to rent what would cost you $6,000 per month to own, does it make sense to pay $48,000 a year more to own a home? If you are in a 30% tax bracket, you might not come close to recouping the difference you paid. Say your deductible expenses are $5,000 a month; 30% of that is only $1,500, which would be your true tax savings per month. Would you spend $6,000 to save $1,500?