In our robust housing market it’s easy to believe that renting is the only option. Especially if you are young and in a high cost of living area such as greater Seattle.
Sure, there are numerous factors that go into taking the plunge as a homeowner. Is your credit strong? Do you have enough for a minimum 3.5% down payment on an FHA loan? How about closing costs? What other debts do you have such as student loans, credit cards, or a car payment?
These days, with post recession lending guidelines, obtaining a loan ain’t what it used to be. But, with modest credit, reasonable debt to income, and about $20,000 saved up you have the potential to purchase a $400,000 home.
In the greater Seattle area these percentages are a bit higher in both the rental and mortgage categories, but the overall ratio remains the same. It’s true, buying is cheaper than renting and why not pay your own mortgage instead of someone else’s!
When does renting make sense? Many of my clients who are new to the area rent for the first year before determining where to buy. Sometimes it’s a lifestyle choice where renting is more logical in order to live in an otherwise out of reach area. For some, there is no desire for the responsibility of home ownership. For others, they are just waiting for the bubble to burst which doesn’t seem likely any time soon!