5 Things To Consider Before You Buy A House

Faith & Finance

Most of today’s renters say they’d like to buy a home, but a clear majority think they’ll never be able to afford it.

It’s certainly gotten more difficult to buy a house these days, with soaring home values and interest rates. But certainly not impossible—especially if you’re prepared.

Renting Is Not Throwing Money Away

One of the most common myths in the housing market is that renting is equivalent to throwing money down the drain. However, this perspective is misguided. Renting provides a home for you and your family, which is a valuable use of money. Moreover, renting buys you time—a precious resource. This time can be used to save up for a larger down payment, research neighborhoods, and make a well-informed decision when the time to buy finally comes.

When considering whether to rent or buy, it’s important to compare the upfront costs associated with each option. Renting typically requires you to pay the first month’s rent and a security deposit, which can be a substantial amount of cash. On the other hand, buying a home requires a down payment and closing costs. If you don’t have 20% saved for a down payment, you’ll also need to factor in the cost of private mortgage insurance (PMI).

Using a “rent versus buy” calculator can help you determine which option is more financially viable for your situation. In some cases, renting may be cheaper on a monthly basis, especially when you consider that it can take 5 to 7 years to recoup the closing costs of buying a home.

Considering the Current Market Conditions

Another critical factor to consider is the current state of the housing market. Home values and interest rates are high right now, but there are signals from the Federal Reserve that interest rate cuts could be on the horizon. Additionally, while home prices remain high, the rate of increase is slowing, with more sellers lowering their asking prices. Waiting could pay off if you’re not in a rush to buy.

It’s essential to look at your monthly budget when deciding whether to rent or buy. Determine what your monthly mortgage payment would be for the type of home you want and compare it to the rents in your area. If your total housing payment exceeds 25% of your take-home pay, you might find it challenging to stay on budget, making renting a more practical choice for now.

The Emotional Side: Satisfaction vs. Flexibility

Buying a home can bring a sense of satisfaction and the freedom to personalize your living space. However, homeownership also comes with the stress of maintenance and repairs. Renting, on the other hand, offers flexibility and less stress. You don’t have to worry about unexpected repair costs, and you may even have the satisfaction of saving money each month.

For some, shared ownership could be a viable option. Multi-generational homeownership is on the rise, allowing families to afford more living space and amenities together than they could separately. This arrangement isn’t for everyone, but it’s worth considering, especially as more adult children are living at home.

Seeking God’s Guidance

As you navigate the decision of whether to rent or buy, remember the wisdom of Proverbs 2:6, “For the Lord gives wisdom; from his mouth come knowledge and understanding.” Pray for discernment, and trust that God will guide you to the right decision at the right time. As Psalm 37:7 advises:

“Be still before the Lord and wait patiently for him.”

By seeking God’s guidance, you can make a decision that aligns with His will for your life.

On Today’s Program, Rob Answers Listener Questions:

• I'm in my 70s, and my wife is also getting older. I'm considering putting $10,000 monthly into a CD ladder, where I would open a new 1-year CD each month. This way, there would be a CD maturing every month that my wife could access for any emergencies. Does this sound like a good strategy for our situation?
• I receive two monthly checks - one from the United States Postal Service and one from my time as a civil servant. I thought I had already paid taxes on this money when earning it, but now I'm wondering why I need to file tax returns for 2022 and 2023 since I'm retired. I haven't filed those years yet, and I'm not sure why I need to. Can you help me understand this?
• I'm 63 years old, and I have some upcoming life events like my son going to college and building a house to retire in. When should I consider my 401(k) fully funded and stop contributing to it?
• I'm retiring from the Ohio Public Employee Retirement System next week. They have been contributing to a money market account for me since I returned for a second period of re-employment. This account has about $15,000 in it. I can take this money as a lump sum, or I can take it as a lifetime income stream, either for my life or my wife's. I'm not sure which option would be better for me. What should I consider when deciding how to take this retirement payout?
• I'm concerned about doing a home refinance versus getting a HELOC (Home Equity Line of Credit) loan. I currently have a mortgage of $244,300 at 2.25% interest. If I refinance, the rate would be around 6.5-7%, and my monthly payment would be around $2,200. I need to get about $50,000 in cash from my home. Should I go ahead and refinance, or would it be better for me to get a HELOC instead?

Resources Mentioned:

• Rent vs. Buy Calculator
• IRS.gov
• Price Cuts Abound as Home Sellers See Inventory Piling Up (June 2024 Market Report - Zillow)
• All in the Family: Multi-Generational Home Buying (Article from National Association of Realtors)
• Rich Toward God: A Study on the Parable of the Rich Fool
• Find a Certified Kingdom Advisor (CKA) or Certified Christian Financial Counselor (CertCFC)
• FaithFi App

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