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Posts Tagged ‘vs’
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If purchasing a home is a goal for your future, there are things you can do now to get ready. If you will be purchasing your very first home, this is particularly important.
Many people think that paying rent is preparation enough for making a mortgage loan payment. This is not the case. They both usually require you to pay a monthly payment. However, this is where the similarity ends.
Payment on a rental is normally less than a mortgage payment. Oftentimes rent will include something besides rent, such as heat or water. You are not required to have insurance when you rent.
Things like utilities are not included in a mortgage payment. There are things that are included, though. Most commonly included is an “escrow” payment. This is money paid into your mortgage company with each payment in order to pay insurance or taxes. Typically, when these annual payments are due, the mortgage company will pay them directly from your escrow account.
It is naïve to think you can pay the same amount for a mortgage payment that you paid for monthly rent. There are too many other costs associated with home ownership. If the house you purchase is bigger than the apartment you rented, the utility costs will be higher. When things break in a rental, the property owner will usually replace them. If something breaks in your house, you are responsible for repairing or replacing it.
Most likely, you did not mow your lawn when you rented. You probably did not landscape, either. Maintaining your home will require you to either purchase a lawn mower or hire a lawn service.
These are just a few of the costs that are involved with owning a house. Do not get discouraged, though.
Making a budget is the best thing future homeowners can do right now. Sit down and make a list of things that you will have to pay monthly when you buy a house. Make sure you are realistic about the costs. Otherwise, this exercise is useless.
Once you have made your list and worked out the monthly cost, start paying the additional amount into a saving s account so you can get a feel for what it will be like to have a mortgage and everything that goes along with it. This should help you determine exactly how much money you will need every month. It will also help you to stay within your actual price range when you go to purchase a home.
Tags: mortgage, rent, vs
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