Should You Rent a Home or Buy One in 2021?

Mallach and Company Real Estate Leander Homes Luxury Leander Homes Mallach & Company Tina Mallach

A new year is an exciting time for new opportunities and goals! And if deciding to be a homeowner is one you’re curious about, ask yourself these questions before deciding to make it a tangible goal.

Do I have enough for a 20% down payment?

While 20% isn’t necessary to buy a house since a loan will require less than that, it is nice because it saves you money in the long run. If you don’t have 20% down, you get charged with private mortgage insurance. This insurance is a premium attached to your monthly costs to protect your lender, so it doesn’t help you at all. So not only does it not benefit you, it will make owning a home more expensive.

Another bonus of putting down 20% is how quickly you’ll build equity on your home. This is a plus because if you need to borrow against that equity, you’ll have the funds. The last benefit of putting down 20% is avoiding an underwater mortgage. A mortgage is considered underwater when your outstanding loan balance is worth more than the value your home could sell for. 

Are home prices ridiculously inflated where I want to live?

Mortgage rates are low, so everyone’s taking advantage and want to buy a house. But this leads to little inventory, which leads to bidding wars and homes selling for more than their worth. If there’s significant inflation happening, 2021 might not be the year to become a homeowner. And if that is the case, check back in a year to see if inventory increases, which causes prices to go down.

Have I considered the additional costs of homeowning?

Homeownership does not just consist of paying a monthly mortgage. There are property taxes, maintenance, repairs, and homeowners insurance. If there isn’t a cushion in your bank now or more income coming in, then renting might be your style this year until your finances change. Be sure to weigh your options carefully, because there is no refund policy for buying a house! 

If you answered these questions and are ready to move forward, contact me today to reach your goal! If you answered no to some of these questions, that’s okay! Still, reach out to us, and we can start planning a path for how you’ll be a homeowner soon! 

Reach out to us anytime: (512) 699-9714 or Tina@MallachandCompany.com

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