It’s obvious that our real estate market has changed with the increase in our mortgage rates. It has become either unaffordable for many or psychologically difficult because fear has set in to keep you on the sidelines. However, you now have to decide what to do.
Is renting really a more prudent path to pursue? One must determine whether paying all that rent and waiting to purchase in a year or two, when hopefully rates might settle back down and prices soften, is truly better than being a homeowner today. Also, renting reduces your wealth monthly.
It’s a good idea to determine the reasons you have considered moving. Maybe the No. 1 reason is to have your children get into and attend a better school system. Or is it the local income taxes or the lack of deductions as a renter? Possibly needing more space? Although rates are higher, you can always refinance, figuring they will trend lower over the next few years.
Those with higher incomes may need the deductions. If in a rental is allowing you to put excess money in the stock market, is that your most advantageous choice at the moment? Possibly not with the way the market is reacting. It isn’t an easy decision to make.
As history has shown us, however, buying a home has been the safest way to force savings with appreciation and to build long-term wealth, while obtaining deductions that paying rent will never provide. Your mortgage will be fixed for 30 years even as rents increased dramatically, but as expenses increase over the years so will rents.
There may be a time when your landlord will not renew your lease to make room for a relative or friend to move into your place. No stability or security exists in a rental as you have no control. But for those downsizing who are seniors and no longer want to own or are considering moving out of the area, then renting would be your best option. Lastly, at some point a landlord decides to cash in and sell, and then you will have to move.
If you are a buyer and are still considering purchasing, has your mortgage person and broker identified what your “needs and wants” are? They must go over your budget and
totally understand your costs per month, e.g. principle, interest, taxes, insurance, monthly maintenance, and a “rainy day” emergency fund. Also, factor in what your daily normal living expenses will be so you will see the bigger picture.
If you have young children, you probably might be staying longer until they are out of school, so over time the market will hopefully normalize. One should check out variable rates that will lower your monthly costs and later on you can refinance to a fixed rate when rates hopefully will be lower. Your broker should be an excellent listener in figuring out the best situation for you and your family. He or she should be able to guide you through the complicated process.
When issues occur the broker should have the knowledge and expertise to answer questions and be able to minimize the problems that occur when they appear. Having you on an automated system to consistently send you listings on a regular basis is far more efficient and quicker than scouring the internet, especially if you aren’t doing this every minute of your day. You just might miss the one home that you would consider buying.
Going into the fall and winter, prices should decelerate and better situations should exist. Homes that haven’t sold within three months might provide you with a path to ownership. With local inventory still tight and demand still apparent, finding that perfect home maybe challenging. Trade-offs are a topic that should be discussed and determined as part of defining your real needs in purchasing.
If you have a budget, then look for homes that provide you the best schools and locations that you can find. Maybe you should consider buying a smaller home and have one less bedroom and one less bathroom and expand your search to more towns. This may not be your last move in the future, but becoming a homeowner and gaining the confidence and security of ownership is a phenomenal feeling. The sweet spot is a balance of a number of variables and with the proper assistance you can determine your next move.
Philip A. Raices is the owner/Broker of Turn Key Real Estate at 3 Grace Ave Suite 180 in Great Neck. He has 40 years of experience in the Real Estate industry and has earned designations as a Graduate of the Realtor Institute (G.R.I.) and also as a Certified International Property Specialist (C.I.P.S) as well as the new “Green Industry” Certification for eco-friendly construction and upgrades. For a “FREE” 15-minute consultation, value analysis of your home, or to answer any of your questions or concerns he can be reached by cell: (516) 647-4289 or by email: [email protected] or via https://WWW.Li-RealEstate.Com