The housing crisis changed the way many people look at buying a home. While most people assume that buying a house was preferable to renting one, now that isn’t necessarily the case. If you are thinking of buying a house instead of continuing to rent one, here are some things you need to consider.
Buying Isn’t Necessarily a Good Investment
Most people consider buying a house a good investment and renting one is only putting money in the pocket of a landlord. However, the housing crisis showed that buying a house doesn’t necessarily mean you are going to get a good return on your investment. Instead of appreciating over time, many homes devalued and people were left with “upside down mortgages,” meaning they were paying more for the house than what it was really worth.
The Washington Post reported that after adjustments for inflation, house prices have only grown at a rate of 0.3 percent over the past 100 years. In contrast, the S&P 500 grew at a rate of 6.5% and buying stocks or bonds have always been considered riskier. Even if you buy one of the Corona, CA homes for sale, you may not see a return on the money you put into it.
Can You Afford to Buy?
If you want to buy a house instead of renting one, you need to first see if you can afford to do so. Ideally, the price of a house should be no more than two and a half times your annual salary, but that is just an estimate. You will need to consider other factors as well, including:
- Take home pay.
- The amount of debt you have.
- Other priorities such as children, saving for retirement, etc.
- The down payment.
A mortgage calculator can help you determine if you can afford to buy one of the Corona CA homes for sale. In addition, you will not only need to consider your other expenses, but you need to factor in a cushion between those expenses and what you take home every month.
Consider the Responsibility
When you buy a house, you will be totally responsible for its maintenance and for repairs if something happens to it. If there is a burst pipe, you will need to call the plumber and pay for the repair. If one of your appliances breaks down, you will need to have it repaired or replaced because there is no landlord to handle that responsibility.
When you rent a house, the landlord is responsible for its upkeep, including cutting the grass, unless it says otherwise in your lease. Unless you are ready and can afford to assume all of the responsibilities of home ownership, then continuing to rent may be a better option for you.
While home ownership is considered the “American dream,” it may not make sense for you to buy a house. You need to calculate how much money you make, your expenses, and how much of a down payment you will need before you can afford to take on home ownership.