Tips and tools to decide if becoming a homeowner is the right the move

Tips and tools to decide if becoming a homeowner is the right the move

One of the main differences between renting and home-owning is the costs of each action in the short-term. These are important factors to consider if you’re weighing the pros and cons of being a renter or a homeowner.

If you’re wondering whether renting a house is better for you than buying one, then you should take into account that there are different short-term costs for each option. They’re the ones that need to be taken care of immediately after you find a place to live in, so you must be prepared to face them.

Renting

The only upfront cost that you’ll have to worry about when renting is a security deposit. Even then, it is a refundable sum of money that’s added to your first monthly rent payment. The goal is to ensure the landlord that you, as a tenant, will be responsible. It’s a way to ensure you’ll pay your rent and respect other agreements.

You’ll also have to pay for some utilities, although you can save money on others. Services like gas, heat, and water are covered in some cases by the landlord. This will leave you only with electricity, cable, and the Internet to worry about. Even then you can profit from these 5 tips to lower the price of your Internet service!

Homeowning

Once you’ve found a house to buy, chances are you’ll want to take out a mortgage to pay for it. If you already know which is the most suitable for you, you’ll have to start thinking about the down payment. In most cases, this is at least 20% of your loan’s total, which you’ll have to pay upfront.

The amount of money you put on the down payment will change your mortgage’s interest rate later on. However, this will impact your expenses in the long run. If you’re mainly worried about your current costs, you should focus on lowering the size of your down payment. Afterward, you can choose to pay off your mortgage sooner, although you should consider if it’s a good move.

In addition to this, homeowning requires other payments such as fees, taxes, and insurances. You can be charged a house appraisal fee, depending on the seller. You’ll also need to search for a homeowner’s insurance.

How to rent an apartment with a bad credit score

 If you have a not too good credit score- somewhere between 300 and 579- you may have trouble renting an apartment if you live in a city where credit checks are a part of the rental process. But it's not impossible.

There may be many reasons for having a low credit score. Whether you're a new US immigrant with no credit or you got into some credit card debt when you were young, bad or poor credit may make it difficult to rent a home.

In this article find ways to fix the problem. 

1. Get yourself a co-signer

Some cities require a co-signer for apartments if you don't make above a certain income based on the monthly rent charged. But even if your apartment doesn't require it, getting a co-signer could be the answer to your apartment problems. 

2. Look for apartments that don't require credit checks

Although you'll likely have fewer options, it may be possible to find some listings on places like Craigslist that specifically say whether or not a credit check is required. You'll want to ensure everything is above-board with places that don't run credit checks.

3. Offer to pay more upfront

If you have less-than-perfect credit you should just be prepared to offer to pay a little more upfront by way of an increased security deposit or a few months' rent ahead of time. This may help ease any of the landlord's concerns.

4. Offer some concessions

Especially if the apartment has been on the market for a while, you might be able to make some negotiations like offering to set up automatic payments so the landlord won't ever have to chase you down for rent.
Including this in the lease can make you more desirable as an applicant, despite your low credit. 

5. Prove your worth

Bring some recent financial documents to prove your income for the past few months — especially if you make a good salary — and consider getting some letters of recommendation from a previous landlord stating that you were reliable and dependable.

6. Wait

There are plenty of ways to go about raising your score, including paying down debts, keeping your credit card balances low, and becoming an authorized user on someone else's account. So, if you don't want to do any of the above, you could always try to raise your score while you look for the apartment of your dreams.

Choose rent over ownership in these cities

When house-hunting, the location is a key aspect to take into account. It can affect the cost of renting and owning a house, which can make the first option much cheaper in certain cities.

In New York City, the difference between the average monthly rent and housing costs (for homes with a mortgage) is huge. Even though last year there was a $250 difference, with renting on the cheaper end, this year the cost of the median monthly rent is almost half of what homeowners pay.

The gap between the median rent and housing payments per month (always considering homes with a mortgage) is a big one in Boston. Luckily, the housing market in this city is the second-fastest-growing one after the slump that was caused by the current pandemic.

San Diego provides a similar scenario: the home prices (for those with a mortgage) are rising. This is the main reason why renting has become much cheaper in comparison, even during the COVID-19 pandemic.

Even if the median monthly rent and housing costs (considering homes with a mortgage) aren’t as different as other cities on the list, Hartford (Connecticut) still proves to be a very good place to rent. It’s said to have many hiring opportunities and high job satisfaction levels.

Both the average renting and housing costs per month (when it comes to houses with a mortgage) are relatively low in Chicago, compared to other cities on this list.

However, experts had predicted before the pandemic that its home prices and sales would be lower, which would give renting the upper hand.

The difference in the monthly payments for rent and homeowning (for homes with a mortgage) in Philadelphia is one of the lowest in this list. The average rent and home values increased during the year of 2019, but the number of available houses decreased. This is one of the reasons why renting is an interesting option in this city.

However, if you’re still thinking about becoming a homeowner, you should consider these things. You can even try this mortgage calculator!

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