If you have been sitting on the sidelines in the real estate market for the last few years as a renter, it is easy to feel as though you have been missing out on the opportunity to build equity as a homeowner. How many times have you heard that paying rent is like throwing money out the window? While a rental housing payment is not applied toward the purchase of an asset, it is important to remember that it pays for essential housing and is not simply thrown away.
Nonetheless, you may be eager to jump into the real estate market as soon as your lease is up. After all, interest rates are still remarkably low, and you may be aware that housing prices in many areas are increasing. Jumping into the market before you are ready, however, could backfire. The housing market is cyclical, and this means that home values can and do decrease from time to time. When the market is hot, like it currently is, buyers often purchase homes that are not quite right for them at a price that may not be comfortable for their budget simply because they want to own a home.
Unfortunately, this could spell the recipe for a disaster if the housing market crashes. Consider if your new home’s price dropped so that you owe more money than it is worth. At the same time, you may no longer be able to afford the mortgage on your home, and you may need to sell. With these factors in mind, you can see that it may be better in the long run to rent until you find the perfect home at a price that you can afford.
Do you want to know what mortgage loan amount you can qualify for? Contact MortgageDepot today for more details and to request a loan prequalification.
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