How Do I Know When It's Time to Stop Renting and Become a Homeowner?

How Do I Know When It's Time to Stop Renting and Become a Homeowner? (Source: pexels.com - used as royalty free image)

We understand the hesitation when it comes time to transition from a Chicago apartment to a house or condo. Really, we do! It can seem daunting to make the shift to homeownership; after all, you’re taking on new responsibilities, different financial obligations, and entirely new sets of terms and ideas.

But here’s the most important thing to remember: Making the switch to homeownership comes with huge perks, opportunities, and singular benefits.

Not sure whether you’re ready to make the move? Here are three signs that you’re ready to stop renting and become a homeowner:

1.) You’re Ready to Save Money

It’s a real estate reality – rents are always going to go up, and they will never go back down. And to make matters worse, rent increases have been accelerating at the fastest rates we’ve seen in years and years. In the fourth quarter of 2015, for instance, rates increased a staggering 4.7%, as compared with the same quarter just a year earlier.

With the high (and still-rising) cost of rent in mind, buying, in many cases, makes a lot more sense as a short-term financial decision, and you’ll end up paying less month-to-month as a homeowner than as a renter - and, bonus, your monthly mortgage payment will stay the same for the life of the (fixed rate) loan. Per one recent survey, it is 24% less expensive to own a home than to rent in the Chicago market. We see homeownership come out as the more economical option by other metrics, as well: The Chicago market requires nearly 30% of your income to afford median rent, for example, compared to only 15.3% to afford a median home. Chicago is also listed as a “strong buy” territory on the national housing market index.

Many millennials are becoming “rent-trapped” by high prices out of a fear of entering the buying market. It’s important to realize that this is financially prudent time to start looking into buying a home, as the market has rarely ever been so welcoming: Mortgage rates continue to sit near historic low levels, there are more resources available to consumers than ever before, tax breaks for homeowners are substantial, and most buyers will be able to make a down payment well below 15%.  

2.) You’re Ready to Invest in Your Future

And buying a home won’t just help save you money month-to-month; it will help shore up your long-term financial health and stability in a lot of huge ways.

Real estate has always been seen as a stable, secure investment, and the numbers continue to support that: For years now, polls have shown that real estate trumps precious metals and the stock market as a top investment. And while paying rent helps benefit your landlord’s finances, paying a mortgage helps build for your future, allowing you to create credit and build equity that will help with future homebuying opportunities while also bolstering your retirement fund.

And don’t forget that your home comes with a future resale value! With markets more stable and home prices trending upwards, buyers could stand to massively increase their net worth in just a few short years.

3.) You’re Ready for the Lifestyle Benefits

So we know that if your finances are ready, buying a home is actually a shrewd financial decision that will pay off in the short-term and in the long run. But putting money aside for a second, there’s a little test that we like to pose when a person is hesitant about their next steps. We’ve talked about it before:

While the cost of a home is determined by two major components - the price of the home and the current mortgage rate - take these out of the picture for now. If these two factors were not in place, would you still wait?

In other words, examine the real root of why it is you want to move to determine if it is worth putting on hold. Maybe you are looking grow a family, or are seeking to have control over renovations.

There are all sorts of perks and advantages that homeownership offers. It might give you extra space for a growing family or to put in a home office or gym. It gives you control over your paint choices or your fixtures, allowing you to truly design and decorate your dream home as you always imagined it.

And all of these unique freedoms add up; research shows that homeowners are “more satisfied with their community and family life” and are more likely to know their neighbors and participate in civic activities than renters. In short, owning a home, in many cases, leads to an uptick in emotional wellbeing and satisfaction.

Ready to make the transition from renter to owner? Still looking for some guidance or advice before taking the next step? Real Group is here to help. Our experienced team knows all of the ins and outs of the Chicago market, and we’re always happy to lend a hand. Why not check out some of our listings or drop us a line to get started?

 

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Chicago, IL 60614

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