Is this the year when you finally stop renting and buy your own condo? If you’ve never owned property before, buying your first home can seem like an intimidating prospect: a 30 year mortgage commitment, property taxes, and you’re on the hook for any repairs. With that being said, there’s also a great satisfaction in owning your own home, and the financial benefits can be sizeable.
The first thing you should do is ask yourself if you’re even in a financial position to buy. Things to consider are that:
- You’ll need a steady and predictable income
- Typically, you’ll need to have worked in the same place for at least a year
- You’ll need a good to excellent credit score
- You’ll need to save money for a down payment
Deciding whether to continue to rent or buy a condo depends on a few factors. For one, you’ll need to know where you plan to be for the next few years. Financial planners recommend that anyone who buys property stays there for at least 5 years.
Then, you should evaluate how your particular area stacks up on the rent vs. buy continuum. There are many great calculators for this online, but the New York Times has one of the best ones. Simply plug in some of the stats for your area and see whether renting or buying is more expensive in your area.
Finally, consider the financial perks. The U.S. government encourages home ownership by making mortgage interest and property taxes deductible. That means you’re effectively paying these with pre-tax dollars and getting more for your money than if you were renting a place for the same amount.