Is now the right time for you to stop renting and consider homeownership?

Home ownership has long been classified as the great American Dream. According to the U.S. Census Bureau as of October 2020, this dream has become a reality for 67.4% of Americans.  If you currently rent, are you thinking of joining the ranks of American homeowners? If you are, what made you realize that you are now ready to buy a home?
 
If you’re still not sure it’s the right time, use these five factors to check and see.  Perhaps now is the time to seize the dream of buying a new home and quitting renting.

 

What signs indicate that it’s the right time for you to become a homeowner?

1.   You are financially responsible — Affordability is often a main factor in achieving home ownership so obtaining a relative degree of financial security is paramount.  In general, buying a new home means you have saved a down payment and the cash for closing costs and have a stable, regular income, and manageable debt.

The cost of home ownership extends beyond just the monthly mortgage payment.  You will also be responsible for keeping your home well-maintained [Read our articles on home maintenance.] It also means you have the monthly income to cover homeowner’s insurance, mortgage insurance, and home maintenance costs. For most, this implies you have the self-discipline to reserve money for those unexpected home repairs.  


2.   Your budget syncs with your expectations.   Unfortunately, the expression “champagne tastes on a beer budget” accurately describes a good number of new home shoppers—they’re not realistic about what they can get in their home while still having a monthly payment they’ll be comfortable with. Not every home buyer gets their dream home with their first purchase. HGTV has set high expectations for most every buyer.

You need to make sure your expectations align with your home purchasing power. Before making the decision to purchase a new home, visit homes in developing neighborhoods to see what they cost. Understand what the standard options are and what upgrades cost. Consult a mortgage lender to determine how much home you can afford and compare the two. If you have a significant gap between your wants and abilities, it’s time to either adjust your expectations or save more to get exactly what you want in the future.


3.   You do not anticipate relocating. When you rent, you may be leasing month to month or year to year. This gives you flexibility to relocate, pursue jobs in other geographic areas and change your home when you decide you don’t like it anymore. Owning a home requires you to stay put, typically for a minimum of two years, optimally, more. So, if you’re happy in your stable job, love the area where you live and don’t see yourself pulling up stakes anytime soon, you might be ready to buy.


4.   Homeownership is less expensive than comparative rentals.  Many people begin to shop for a home when they realize that they seek more space, features and amenities than are available in the standard apartment.  Homebuilders frequently market homes comparing the price of ownership to the cost of rent. So, how does this stack up if you want more and are tired of paying rent?  The average rent for an apartment in the Charleston market is $1,434. And that’s for under 1,000 SF.  

The average sales price for the tri-county area for 2020 was $413,046.  Provided you pay 10% down and get a 30-year fixed rate mortgage for 3.5%, your monthly principal and interest payment might be $1,666, which is not much higher than the rent on a substantially smaller apartment!  Check out our Mortgage Calculator.  It’s easy to see that in a market like we have now, homeownership is a very attractive proposition when compared to rent.


5.   You are striving to build your financial worth.  Homeownership is a great investment—in fact, it is the single most popular way to build wealth in the US. It can be said that renting is throwing money out the window.

How can homeownership increase your personal wealth? Provided that the economy remains stable and home prices in your area are steady or increasing, it is a solid investment that will bring good returns. However, as was experienced by many people who purchased homes at the high point of the market in 2005, and went through the subsequent recession, equity was lost.  Homeowners who can stay put and ride out market fluctuations are in the best position.

You can gain equity if you plan on owning your home more than two years and provided the real estate market remains stable. In a market like Charleston’s where prices have been steadily increasing year over year, and new manufacturing and jobs are coming in droves, gaining equity is a strong probability.

If these considerations line up with where you’re at in life, it’s time to start looking for a new home. Congratulations!

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Thank you for reading and sharing our articles from The Greater Charleston New Homes Guide. Our business is to know Charleston, SC's new home construction, home builders, neighborhoods, and homes so we may assist you as you take your new construction home journey. Please take the time to explore our site. The Greater Charleston New Homes Guide is considered the best and most reliable ‘local’ resource to new home construction, builders, neighborhoods, and homes throughout the Lowcountry since 2004.

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