Are you currently paying your rent on time every month?

Yes?

Then you’re already paying a mortgage, it just isn’t your own.

Your monthly rent payment could be the amount of your mortgage payment. It is a myth that it is cheaper to rent than own a place to live. Heck, in some areas and situations it is actually cheaper to own than rent!

There are lots of perks to owning your home instead of renting, and if you are currently renting you KNOW the downfalls of renting.

Ugly paint colors
Communicating with a landlord or property manager to have repairs done
Hearing your too-close neighbors
Pet restrictions
Poor parking
Lack of electrical outlets
Poor internet connection
Outdated everything

The upside of owning is FREEDOM

You can choose how to decorate including flooring, paint, appliances, and fixtures
You can add swing sets, fire pits, or sheds to your outdoor space
You can actually fix any heating or cooling struggles so you’re comfortable
You can do updates to add desired things like additional outlets, ceiling fans, or smart home capabilities

When you’re budgeting and trying to decide if it is more economical for you to rent or buy consider these factors…

Monthly payments
Insurance - home or renters
Upkeep and repairs

Write out a budget and see what you can afford for monthly payments, see if homeowners insurance would be doable since it is typically more money than renters insurance, and then see if you have anything left over for upkeep and repairs. If that budget sheet makes sense then it is time to talk to a lender and real estate agent and get yourself on track to buy a home. If that budget sheet doesn’t yet say you’re ready for homeownership, that’s okay, now you know what to work towards if homeownership is a goal for you.

The upfront costs…

Renting requires a security deposit

Owning requires a downpayment, plus closing costs, plus earnest money deposit

Credit is important for getting a loan, but cash is still king. You need to have some money available to you to make the upfront costs of buying a home possible for you in most scenarios. Renting usually only requires the security deposit upfront so if you’re short on cash then renting might be better until you build up a savings account- just be sure to rent a space that you can afford to save while still paying the bills.

When you’re buying a home the fees come in phases.

Step 1: Home Search $0

This costs nothing but the gas to drive to the homes and the snacks you eat en route.

Step 2: Offer acceptance $500+

Once your offer on a property is accepted, you write a check for an Earnest Money Deposit. The amount varies based on the price bracket of the home and how serious you want your offer to look in the sellers’ eyes. For a property under $100,000, about $500-$1000 earnest money is typical. For properties closer to $300,000, about $2500 is typical. Earnest money eventually goes towards your total costs of mortgage, closing costs, and down payment, but that check does go into the bank much sooner than you would close. You get this money back if you back out of the deal because of a contingency (inspection, appraisal, title). You don’t get your earnest money back if you get cold feet.

Step 3: Inspections $500

If you’re getting inspections done on the home (which you should as a first-time homebuyer) plan on spending about $500 at time of service for your Radon, Pest, and Whole Home Inspection. Even if you back out of the deal because of the inspection you do not get this money back. If you get more inspections or tests plan on paying more, if you get fewer inspections or tests plan on paying less.

Step 4: Closing Costs $3000-$6000+ Downpayment $0+

Closing costs are at least a few thousand dollars, plus your down payment. If you are seriously thinking of buying a home, talk to your bank and/or a real estate agent about how much your closing costs could be in your specific situation since there are lots of factors that will impact closing costs. Regardless, you’ll need a few thousand saved up that you cannot get out of your loan. Closing costs include the title search, transfer tax, deed fees, recording fees, notarizing fees, lender fees, property taxes, and more. In my market, for a buyer of a property around $100,000, I tell buyers they’ll need about $3000-$6000 for closing costs. Downpayment can vary wildly based on the type of loan which is why it is great to work with a lender and a real estate agent who can get you ballpark numbers based on your specific situation.

Step 5: Repairs and Updating $0+

After the home is yours you may want to do some updates to flooring, paint, windows, kitchens, or bathrooms. Maybe the home you purchased needs a little more TLC and handy-man work before it is ready to live in. I also advise my buyers to over-save throughout the buying process so that they can spend the extra money on furnishings and updates.

Keep in mind, I am writing this with knowledge of only what is typical in my market from my experience. It is pretty cost-effective to own a home in Central Pennsylvania, specifically in the 814 area code, if you plan to live here for multiple years. The average home buyer can get into a starter home for about $100,000 here. Outside of the City of Altoona, homes are usually eligible for USDA loans which require zero percent downpayment. Don’t be intimidated by the process because you’re young, or single, or bad with money. Maybe you’re better with money than you think you are! And it is better to get into a home while you’re young so that 30 year mortgage doesn’t have to be part of your retirement budget. And as for being single.... Well, I can’t match you with a partner, but I can match you with a home!