Realtor Q and A: If staying 5 years or more, look at buying
A.: There are a lot of 'Rent v. Buy' interactive calculators that you can find on various websites that will allow you to plug in variables such as your current rent per month, the sale price of the potential home you are considering buying, property taxes, your planned down payment, the current mortgage interest rate and your own timeline for your next move: three years, five years or longer.
These software applications are designed to give a general idea of whether it's a good time for one to buy a home or continue to rent. They have assumptions built into the software such as average closing and settlement costs and the average tax bracket and income of the average buyer. It's a pretty general analysis and after playing around with several of them, it seems that the recommendation that came up most often, based on the (local New Hampshire) variables I used, indicated that five years was just about the timeline that it made sense to buy rather than rent. In other words, if you plan to stay in one place for at least the next five years, then buying a home rather than continuing to pay rent was advisable.
It is largely a function of the lower prices of homes and the interest rates these days, which make ownership so much more affordable compared to renting, particularly for those who do not plan to move any time soon.
Many other factors, however, should be part of the consideration, including job stability, lifestyle and saving habits, to name a few. Even if you don't plan a move in the near future, is your job one that is likely to be moved out of state or even downsized out of existence due to technology or some other factor?
If you are a two-person household, can you make ends meet on a single income if you had to, at least short term? Will you still be able to contribute to savings and retirement plans after buying the property or will you be forced to live pay check to pay check even if there is no interruption in your income? Are you prepared for the commitment that owning a home involves; i.e., repairs and ongoing maintenance to keep the property in good condition?
These are all considerations, but we have only touched on a few of them. Your professional Realtor will be able to offer you a lot more in your initial meeting.
If your basic plan is to move in and stay for at least five years, then it's probably a really good idea to consult a Realtor as it may never be a more opportune time to become a homeowner than it is right now, in 2012.
After all, you have to pay to live somewhere, right? It may as well be your own place.
This information has been provided by the Greater Manchester/Nashua Board of Realtors in conjunction with the New Hampshire Union Leader's Advertising Department. Any questions about the content should be directed to the realty board at 166 S. River Road, Bedford, N.H. 03110 or by e-mail to firstname.lastname@example.org.