Many of my clients who are first time homebuyers, or who are coming back to the housing market after a (usually unwanted) hiatus, are curious as to when it makes sense to drop the rental and buy something. There are a number of things to consider as you make this leap, and as the short term costs add up, it is important to remember the long term savings and benefits. That being said, there are a few things to consider before jumping into homeownership.

First, you need to be sure you have the needed cash available to buy a house. While we can get you approved for a mortgage with as little as 3.5% down, and you can get seller’s concessions to cover most, if not all, of the closing costs, you still need to have some cash available to buy a house. You need the down payment money, money for moving, and money for unexpected repairs, at the very least.

In addition, you need to be sure you are ready to handle owning a house. If your boiler breaks, your roof gives in, or your basement floods, you need to be ready and able to take care of it. If you are not ready to deal with the stresses associated with homeownership, then you might want to keep renting for a little while.

Finally, you want to be sure you can afford to live in the neighborhood you want. I recently had a client who lived in a rental house in Northville. His house had 4 bedrooms, 3 and a half baths, and an updated kitchen with a nice yard. To find a house similar to what he had, he was looking at houses for over $300,000. Unfortunately, he only qualified for $125,000. Based upon his career path, expected income over the next two years, and rate of savings, we realized he should be able to buy the house he was looking for if we waited 18-24 months, rather than buying a house in another town and uprooting his family.

If you are considering buying a house and would like to go over your specific situation, please contact me and I will help you figure out if it is the right time. If you have anything to add about determining when it makes sense to buy verse rent, please leave a comment.