purchasing and refinancing

OWNING VS. RENTING

Homeownership is a personal choice, and it’s a big one! But did you know that owning a home can actually cost less than renting? Especially with the low rates available today and an improving economy, it could be a great time for you to make the move. And if you’re unsure about the process, educating yourself is the best way to make the best decision for you and your family.

Fortunately there are some great Internet tools that everyone can use to gauge the environment of their local market. The real estate website Trulia releases an annual Rent vs. Buy Report, which analyzes the average cost of renting versus buying for all homes on the market in America’s 100 largest metropolitan areas. Although affordability varies by location, buying a home is generally 44% cheaper than renting nationwide.

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FINANCIAL CONSIDERATIONS

Homeownership is cheaper than renting in all of the 100 largest U.S. metros by a substantial margin, according to Trulia’s 2013 winter report.

But you still have to consider your own personal circumstances despite national statistics. What kinds of things would you need to change in your budget in order to buy a home? For instance, would you be able to still save for other goals after purchasing a home? Would you have enough money for potential—and sometimes costly—emergencies, such as paying for a new roof?

Property taxes, insurance, utilities, and homeowners’ association fees (if any) can also weigh heavily on a monthly budget after you buy a home. Do you know how much these things would actually cost in your situation? Did you know that the housing market is always changing, and that the value of your home could decrease—or increase—when changes occur? Do you have a trusted accountant or tax professional who can help you reap all the tax benefits of buying a home?

Owning a home doesn’t just reward you with potential tax benefits (always consult a professional tax advisor). It can also help you build and increase personal wealth in the form of equity. Of course, building equity is not guaranteed because of a fluctuating market, and it may rise and fall over time. But equity is a powerful advantage to home ownership.

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BUDGETING FOR A HOME

Everyone has a different timeline for buying a home, and the budget is often a leading factor in helping someone decide when the time is best. At Lending Key, we’re here to help you evaluate what you can afford and then weigh all your options when it comes to getting a mortgage, and, ultimately, a new home.

Our professionals will lead you every step of the way through the process to make sure you’re making the best home buying decision possible.

OTHER CONSIDERATIONS

There are many other factors aside from financial considerations that go into deciding whether you are better off renting or owning a home. Would you like to be free to do what you please with the place in which you live—free from a landlord’s restrictions? If so, home ownership gives you that freedom. But are you prepared to carry the entire burden when it comes to home repairs? With homeownership, you pay for upkeep—not the landlord.

We know that purchasing a home can be daunting, but finding an expert partner in the home buying process is what will make it manageable and successful. The Lending Key offers you a high level of expertise and guarantees that you’ll be making the right decisions at every turn.

SHOULD YOU REFINANCE?

Is now a good time to refinance?

Read through the following scenarios to see if you would be a good candidate for refinancing:

1. Your home has gained substantial value. Often, certain areas of the country go through a stage of significant increase in home prices.  Refinancing makes it so that you can capitalize on your home’s increase.
2. Your mortgage interest rate is dropping.  If the market rates in your area drop ½% to 5/8% below your rate, it might be a good time to refinance.  There may be potential benefits that aid in lowering your loan amount. The first benefit would make it so that your terms of repayment would become shortened. The other benefit would make it so that your residual monthly commitment would be lower while maintaining the same repayment term. Either way, you may find yourself with a few options to save you money on your mortgage.
3. Your mortgage term is still young.  If you refinance at this time, it tends to benefit you greater than if you were to refinance when your payments are going toward the principal portion of your loan.

The Lending Key will be happy to lend a helping hand and expert advice before you jump into refinancing.  If you are curious, contact us and we can discuss these factors with you in depth.

BENEFITS OF REFINANCING

It is imperative to remember that refinancing begins you off with a fresh mortgage and brings you back to the very beginning of the payment schedule.  However, the benefits of starting over may outweigh any cons that are present.

You begin to be able to:

• Change your loan to a fixed-rate mortgage to lower the risk of a variable interest rate.
• Decrease your monthly payments by lengthening the payment term or shifting to a lower interest rate.
• Shorten the duration of the mortgage and pay off the loan faster.

All of this frees funds to help consolidate other debts and put toward other expenses such as a college fund, retirement, home improvements or any other major expenses.

WHAT TO DO NEXT…

If you are considering purchasing a home or refinancing after reading these helpful hints and tips, fill out the application on the apply now section of this website or contact us directly with any questions you may have.