Renting isn't always the cheapest option in housing. You might think that you aren't able to afford a house but we suggest you take another look.
The first thing you need to consider is the amount of house you can afford. You need to find your budget. Houses can be expensive when you start adding things that you don't necessarily need such as an excessively large bathroom or extravagant kitchen. You can have a nice home without going overboard. Think about what you absolutely need and start with that...you can always add.
Once you've established your budget, you need to go to a bank or lending institution. Getting pre-approved for a loan will let you know how much the bank will lend you to get a home. This all depends on your credit, down payment, and income. Banks are usually looking for a credit score of 640 or higher but depending on your down payment, it may be flexible. You may also look into USDA loans which offer no money down loans. Keep in mind that the bank might qualify you for more than your budget amount. Just because the bank will lend it to you, doesn't mean that it's the best idea to maximize that. Remember to trust your budget numbers.
After you've gotten pre-qualified, take a look at our models to build or current homes for sale. You can look at our models at www.BrianSullivanContractor.com or our current homes for sale at our "Buy" link on this website. We can also build from your model if you have a design. Once you've found something you like, give us a call and we can steer you in the right direction with your budget.
So now we get to the numbers. Let's take our Pipit model (our smallest 3 bedroom) and explore the numbers. Here is a rough example of costs. These are not exact as we are basing it off rates and costs that change daily but they will give you a general idea.
Monthly Payment: $1,100 (based off of Orchard Park homes)
Interest Rates are around 4.5% right now. Using that rate and a purchase price of $129,000 with a 30 year loan and no down payment
Monthly Payment: $653.63
*Note: Even with 100% financing, buyers have to come up with some closing costs. Typically they range from 2-3%.
These numbers are based on the same model (our Pipit model) and using our standard specs. If you factor in an extra $150/month for homeowners insurance (with homestead exemption) and taxes, you're paying about $803.63/month . By renting in this current scenario, you'll be paying roughly $3,556.44 more annually. If you can afford to rent, you can afford to buy. Who wouldn't want to own their own home versus renting? The best thing about buying a home versus renting is that you'll get your money back. Houses appreciate whereas renting gives you nothing in return. We suggest you take a hard look at buying before interest rates and construction costs increase.
Don't let buying a home scare you. We are always a phone call away and will be more than happy to help steer you in the right direction!
by Brian Sullivan Contractor, Inc.