Deciding to purchase a home is a very big decision, one of the biggest ones you will ever make. There are a lot of things to take into consideration before you decide whether you’re ready to buy, or not. You need to think about where you want to build your life-if it’s not in Ohio, it might be in your best interest to continue renting. Read on for more tips on deciding whether you should rent or buy a home in Ohio.
First, you should assess your finances and determine how much can you afford to put toward a down payment. Down payments on a mortgage usually cost between 5% and 20% of the selling price of the home. The price of the down payment also affects your monthly payments. Also, you need to take into account car payments, credit card payments, bills, debts, and any other financial obligations you have when you’re determining how much you can afford for a down payment and monthly payments (mortgage or rent payments). A good rule of thumb is to keep your monthly payments (mortgage payments and other credit payments) to below 40% of your monthly income. Knowing your credit score can be a great place to start assessing your finances.
NOTE: if you have a score under 740, renting may be the way to go, at least until you are able to boost your score.
You also need to consider the fees associated with both renting and buying. Some neighborhoods in Ohio have a Homeowners Association Fee, and many condos do as well. Make sure you talk to your real estate agent about the additional costs and fees of both renting a property and owning a home.
Be sure to factor in costs of insurance and taxes when deciding between renting and buying. When you own a home, versus renting one, you have to pay real estate taxes and homeowners insurance. You may get a nice tax return at the end of the year for owning your own home, but make sure that you can afford to pay the monthly fees leading up to that return. If you rent, you do not have these fees or the tax incentive.
Finally, ask yourself, “Am I here to stay?” If you are still mobile, moving around, and not sure where you want to end up, it doesn’t really make financial sense to buy. However, if you plan to stay in Ohio for awhile (at least five years), buying a house will allow you to build equity-which is great!
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