You are here: Benchmark Home » Saving Money

Category: Saving Money

Is a HELOC a good financial choice?

by I Am Benchmark

 A Home Equity Line of Credit (HELOC) is an easy way to borrow money using your home’s value as collateral. Let’s look into how a HELOC works and whether this option is right for you.

  • A home equity line of credit (HELOC) works much like a credit card. With money drawn from a HELOC, you can pay for things like home remodeling/repair fees, credit card debts, or even save it for rainy day funds.
  • A HELOC’s interest rates can be significantly lower than a credit cards

How Much Can You Borrow with a HELOC?

The first step in deciding if a HELOC is right for you is knowing whether you have enough home equity to qualify. This will also determine the amount of the credit line that you’re eligible for. 

Your home equity is the difference between your home’s appraised value and your mortgage balance (assuming you have an existing mortgage). 

Example: HELOC for a home worth $500,000

if your home is worth $500,000 and you have 50% equity, you may be able to borrow as much as $150,000 in a Home Equity Line of Credit (HELOC).

Let’s break that down.

  1. If your home is worth $500,000 and you owe $250,000, your equity is 50%.

    $500,000 – $250,000 = $250,000

    • If your home is worth $500,000 and you don’t have a mortgage, your equity is 100% ($500,000 – 0 = $500,000).

  2. To estimate your possible HELOC credit limit, calculate your combined loan-to-value ratio (CLTV ratio, or your line of credit relative to your home equity). Most HELOC lenders allow a CLTV of at least 80% on your main home, sometimes higher.

    To estimate, multiply your home’s appraisal value by 0.8. This is approximately how much money lenders may let you borrow against your home. With a home value of $500,000, it comes to $400,000.

    $500,000 x 0.80 = $400,000
  3. Then, subtract the amount you still owe on your existing home loan. For our example, let’s estimate that to be $250,000.

    $400,000 – $250,000 = $150,000 credit limit for our example HELOC.

So, How Does a HELOC Work?

A HELOC is a revolving line of credit with a variable interest rate, like a credit card. It also has a fixed term and a defined repayment period, like a mortgage.

A credit card’s credit limit is based on your household income and credit score. You can spend as much, up to the credit limit, or as little as you want in each billing cycle. When you get your statement, you have to make at least the minimum monthly payment, but you can choose to repay the entire statement balance if you don’t want to accrue interest. When your payment is processed, your available credit increases by the amount of your payment that went toward the balance. If a portion of your payment is going to interest, this portion will not contribute to your available credit.

A HELOC is similar, but your credit limit is also based on how much equity you have in your home. Additionally, a HELOC has two periods:

  1. First, there is a draw period, typically several years, during which you can borrow up to your credit limit and make interest-only payments.

  2. Then, there is a repayment period, generally several more years, when you can no longer borrow money but must repay your outstanding balance with interest.

What are the steps to get a HELOC?

  1. Apply with a Benchmark online, in person, or over the phone.

  2. You will be asked to submit supporting documents including photo ID, paystubs, tax returns, proof of assets, bank statements, current mortgage details, and other financial information

  3. If approved, Benchmark will issue an initial, conditional approval

  4. Benchmark will order and schedule an appraisal of your home.

  5. Our underwriters will check your application and make sure everything’s in order

  6. Your final approval will be sent by your underwriter

  7. Close the loan and receive funding. Since a HELOC is not a lump sum loan, you’ll receive a special account or card allowing you to access your HELOC as needed

What else should you know to decide if a HELOC might be a good choice for you?

We recognize that not every loan product is right for everyone. There are a few more things you should know about HELOCs.

  • Like most credit, the better your credit score and credit history, the higher the chances are that you will be approved. 

  • A HELOC is a very low cost way to borrow money, and can be an attractive option if you do not have a substantial amount in savings, and are in need due to a crisis or economic downturn. 

  • You can use a HELOC to pay for almost anything, and funds are easily accessible once open. 

  • If you feel burdened with credit card debt, and you’re looking for a way to save on interest, a HELOC could be a great tool. 

Curious to learn more?

At Benchmark, we are committed to listening to your goals and setting you up for future success. To learn more, Contact your local Benchmark branch. Contact us today for personalized information. Call me yourself or request a call from me. WeI would be honored to provide you with our famous excellent service.

 

Benchmark brings you home.

benchmark circle icon

Sellers: How To Incentivize Home Buyers Inexpensively

by I Am Benchmark

Has your home been on the market long? Do you feel like selling your home is an insurmountable task? Selling your home can feel hopeless the longer your property sits awaiting a buyer. As sellers struggle to attract buyers, they are confronted with ideas like price slashes or full remodels to sell to their homes. These ideas would inevitably cost thousands, reducing the gain from the listing price, and leave a seller wondering if there is a better way. Perhaps what you’ve been waiting for is a 2-1 Buydown.

It’s Hard to Sell in the Current Market

Since the beginning of 2022, sellers may have noticed a decline in property purchases.

In fact, the National Association of Realtors says that

 “existing-home sales declined for the fifth straight month to a seasonally adjusted annual rate of 5.12 million. Sales were down 5.4% from May and 14.2% from one year ago.”

https://www.nar.realtor/newsroom/existing-home-sales-slid-5-4-in-june

The national inventory of unsold homes is on the rise, almost parallel to the rise in interest rates from 2021 to 2022. The housing market interest rates have seen a steady increase from the average 2.96% in 2021 to 4.61% at the end of Q3 in 2022. Current buyers have now watched interest rates cross 5%, with no projections for drastic decreases any time soon.1

1https://themortgagereports.com/61853/30-year-mortgage-rates-chart

With increasing buyer fearfulness, how can you, a seller, stand out and encourage buyers to choose your home as their first option? Offer a 2-1 Buydown agreement.

What is a 2-1 Buydown?

The 2-1 Buydown: The seller contributes an upfront fee, which lowers the buyers effective interest rate by up to two percentage points for the first two years of their loan.

This lowers initial monthly payments, giving the buyer more funds to turn their new house into a dream home, or to use in any other financial goals, and gives them time to plan for the higher interest payment after the first, and then second year.

You, the seller, will have provided a unique experience by enabling the buyer to build equity as they ease into their new home.

2-1 Buydown Inspiration Story

The following story is fictional, loosely based on a real sale, and is used to explain how a 2-1 Buydown could help a seller incentivize a buyer.

A seller named Benjamin Smith, like you, dreaded each passing day as his property listing had no potential buyers.

After weeks of constant turmoil, he turned to his friend, a loan officer at Benchmark. After a lengthy conversation about market prices and interest rates and the awful feeling from not being able to sell his home, they discussed the idea of a 2-1 Buydown. The following week, Ben’s Realtor mentioned that a buyer had interest in the home, but wasn’t fully convinced yet.

Ben asked his agent to express that he would be willing to do a 2-1 Buydown. The buyer was very happy with the idea of two years of lower payments, and planned to use the resulting savings to remodel the garage into a home gym.

He had a $250,000 loan with a note rate of 5%. The monthly payments would be $1,342. After Ben’s temporary 2-1 Buydown of $5,232, here’s what the reduction in monthly payments would look like for the first two years. (APR 5.558% at 5.375%)

YearRateMonthly Payment
13%$1,054
24%$1,194
35% (original rate)$1,342

That left our homeowner Ben with an extra $288/mo for the first year, and an extra $148/mo the second year before the original interest rate begins in the 3rd year. That’s a total of $3,456 saved in the first year, and $1,776 saved in the second year, for a combined savings of $5,232 (the 2-1 Buydown amount) for the first two years of homeownership. This also gave Ben the opportunity to buy now, and time prepare for higher payments later, rather than waiting to buy (which has its own costs).

Sell faster with a 2-1 Buydown from Benchmark

Ready to learn more? Get the sellers’ edge, and help your buyers start building family wealth with a 2-1 Buydown agreement with Benchmark.

Contact your local Benchmark branch. Contact us today for personalized information. Call me yourself or request a call from me. WeI would be honored to provide you with our famous excellent service for your new loan.

 

Benchmark brings you home.

benchmark circle icon

Is it still a good time to buy?

by I Am Benchmark

Better late now than never later.

It’s the question that’s buzzing around real estate offices, mortgage companies, backyard barbecues, water coolers and passing conversations with neighbors.

The short answer is — we think so.

Yes, it is still a good time to buy.

The long answer is more complicated. Consider these four trends to help you as you make your housing buying decisions.

Higher home prices show no signs of reversing course.

Even before the pandemic, the supply of the housing market couldn’t meet the demand. In 2020, COVID-19 affected the housing market just like it did every other industry. However, we’d soon find out that the real estate market was a double-sided coin.

Let’s set the record straight. If you’re expecting the trajectory to result in a housing bubble ready to burst, reminiscent of 2008’s Great Recession, this isn’t that. The market variables that resulted in the 2007-2008 housing market crash don’t exist now. If higher home prices cause are causing you to hesitate, keep in mind that prices will likely continue to rise. Home prices were rising already before the virus, and multiple variables from the pandemic created greater demand in an already competitive market.

With the introduction of social distancing measures, many began to conduct the majority of their lives inside their homes and, unsurprisingly, wanted or needed more space. Many also sought financial security, preferring a traditional equity purchase that still carried relative liquidity amid the health crisis uncertainty. What better way to adapt to the new world than investing in your home: the very place you planned to ride out the epidemic? Many see it as a timely investment vehicle.

Buying gained popularity.

However, many other Americans had the same idea. Additionally, the COVID-19 pandemic affected the ability and access for individuals to go to work. Companies in the housing industry suffered, as workers were absent due to new mandates among other pandemic-related challenges. As the pandemic wore on, labor and building materials supply chains struggled further.

Earlier, I wrote that, before the pandemic, as well as in its beginning, housing demand had exceeded supply. The difference now is that the supply of home options is extremely low1 due to the factors mentioned above, which have resulted in climbing home prices. In fact, Zillow projects a 17% year-over-year rise in home valuations for 20222.

The effects of the pandemic only added more fuel to a white-hot market. Home prices aren’t going down any time soon, even if their rise slows.

1 https://www.nytimes.com/2022/01/20/upshot/home-prices-surging.html
2 https://www.zillow.com/research/home-values-sales-forecast-jan-2022-30667/

Interest rates have started correcting to higher levels.3

At the beginning of the pandemic, in the face of a developing national health crisis, the Federal Reserve took action. They pledged (and proceeded) to buy debt and mortgage-backed securities (MBSs) in an effort to help the economy.4 This resulted in an artificially high demand for MBSs, driving down mortgage interest rates. For a time, this helped add stability to the economy. It made it easier access financial resources, investments, and loans — such as mortgages. It’s not surprising that so many individuals decided to pursue homeownership during the pandemic. Demand was already outpacing supply. The lower interest rates made a home purchase that much more attractive, tipping the balance further.

As inflation has risen, so too has the labor market. The Federal Reserve has noticed, and has claimed that they will begin selling some of their balance sheet. This move serves to correct mortgage interest rates back up to normal market levels.5

A more balanced market is good for the economy, in general. However, higher interest rates will only decrease buying power for home buyers. Additionally, home buyers who have waited for prices to fall just may see prices at least hold, if not increase.

See also: Buy Now To Buy More: What Interest Rates Mean For You

The later you buy in 2022 and beyond, the greater your chance for a higher mortgage interest rate.

3 https://www.forbes.com/sites/billconerly/2022/01/27/what-rising-interest-rates-mean-for-business/?sh=14586c3e23a1
4 https://www.brookings.edu/research/fed-response-to-covid19/
5 https://www.federalreserve.gov/newsevents/pressreleases/monetary20211215a.htm

Rent price increases are breaking records6 and making headlines.

It is well-known that rent prices rise over time. This is due to a variety of factors: inflation, rising utility costs, location value, and the list goes on. With reduced supply of homes and renter instability during the height of the pandemic, rent prices are up 14% year-over-year, with some up over 30% in many major metro areas.7

Renting is a great option for those who want to stay flexible. But for those looking to optimize their finances, it’s helpful to remember that 0% of your rent payment builds your own equity. Since it’s not part of a home investment, you’ll never see any of that money again!

Although a down payment may sting at first, a fixed rate mortgage payment does not increase over time. Compare that to rent, as it continues its daunting upward climb. Renting gives no net worth gain, and leaves you at the mercy of your landlord and binding lease agreement.

In some cases, after the down payment, a mortgage payment may be lower than rent for a comparable space. Be mindful where your money is actually going. You may be able to gain some equity for your housing costs.

See also: Is Buying A Home Really More Expensive Than Renting?

6 https://www.forbes.com/advisor/mortgages/rent-prices-all-time-high/
7 https://www.redfin.com/news/redfin-rental-report-december-2021/

The cost of waiting may be higher than you expect.

For many home buyers, the down payment is the hardest obstacle to overcome. With the home price index rising8, it will become increasingly difficult to save enough for a down payment. Down payments are measured as a percentage of home pricing, and are often tens of thousands of dollars. It can be quite a challenge!

Upward trends in demand, interest rates, rent prices, and the Consumer Price Index (CPI) means saving could become more difficult. If accounting for normal expenses and goals wasn’t enough, you will also be contending with market forces beyond your control. Should these trends continue, It will be harder to save for a ~12%9 down payment.

See also: Owning A Home May Already Be Within Reach

Depending on your situation, you may need less for a down payment than you think. Building your equity sooner means you could actually benefit from rising home prices. Even in a sellers’ market, getting into a home you can afford now may benefit you in the long run. However, we’d still advise that you exercise due diligence as you determine the best real estate investment for your situation.

8 https://www.spglobal.com/spdji/en/indices/equity/dow-jones-us-real-estate-index/#overview
9 2021 median down payment: https://www.nar.realtor/sites/default/files/documents/2021-home-buyers-and-sellers-generational-trends-03-16-2021.pdf

In the current housing climate, the cost of waiting to make a move in the real estate market will most likely cost you more in the long run.

Buying a home is a long-term decision that should be made with careful consideration. Financial decisions should be strategic. At Benchmark, we provide education to hopeful buyers regarding trends in the market and how they could affect future plans. We are committed to listening to your vision, and getting you the right mortgage for your future success. 

Contact your local Benchmark branch. Contact us today for personalized information. Call me yourself or request a call from me. WeI would be honored to provide you with our famous excellent service for your new loan.

 

Benchmark brings you home.

benchmark circle icon

Can You Pay Off a 30-Year Mortgage Early?

by Holly Taylor

Whether you’re buying your first home or have owned several houses over the years, you’ve heard of the 30-year fixed rate mortgage. Many people choose the traditional, 30-year loan for the financial flexibility it provides.. Like most things in life, there are pros and cons.

A Fixed Rate 30 Year Mortgage…

✓ Offers a lower payment amount than similar loans with shorter periods, allowing other income to go toward necessities, retirement accounts, college savings, etc.
✓ Requires more interest in the long run in exchange for the lower payments over time.
✓ Provides the opportunity to own more property than a 15-year mortgage would allow due to the lower payments.

Whatever the reason you chose a 30-year mortgage loan, it may someday occur to you to consider paying off the loan early.

So, the short answer is yes. You can pay off the loan early. However…

Consider these two questions:

  • Should you pay off the loan early?
  • If the answer to the first question is yes, what is the best way to do that?

The answers to these questions depend on the reasons behind your payoff decision. Your highest priority could be one or more of the following.

  1. Do you want to be debt-free?
  2. Are you looking to save money on interest?
  3. Do you need your income for other needs?
  4. Do you want to reduce your monthly expenses?

Once you understand your financial motives, you will be able to make the best choice for you.

Should I pay off the loan early?

First of all, congratulations for even reaching the point of considering paying off a loan early. That’s an accomplishment in itself!

Many people who pay off their mortgages early are motivated by the peace of mind that comes with lowering debt, and saving thousands of dollars of interest payments.

Before you take action:

  • Find out if there is a prepayment penalty on the mortgage.

    A prepayment penalty is a rare circumstance — but it is possible.

  • Consider any other debt first.

    Should your money pay off something more time-sensitive first or another loan that has a higher interest rate?

  • Remember your other financial goals.

    Do you need to put money toward your retirement savings, emergency funds, college savings account, etc.?

  • Consider whether your extra payment amount would serve you better elsewhere.

    Sometimes the potential for earnings in another opportunity exceeds or offsets interest payments.

  • Find out how long you have left to pay off the loan.

    See if the interest amounts you save would be worth lowering your monthly usable cashflow.

It’s a good idea to evaluate your current financial situation, as well as what you want your future to look like, before making any decisions.

What are some smart ways to pay off a mortgage early?

Once you have determined that it would be wise to pay off your mortgage, there are multiple ways to do so and become free of housing debt!

It is also good to remember that paying off a mortgage early doesn’t mean you have to pay it off all at once or immediately.

Taking baby steps toward a goal is often better than taking a giant, unsteady leap! It’s vital to choose what works best for you.

Here are some options you might want to consider:

  • Make extra monthly payments.

    Extra monthly payments are the baby steps that can get you to your goal!

    If most of the value of your latest monthly payments go to principal, timing your extra payments is less impactful; you’ve made it past the maximum opportunity to save the most on interest.

    However, if most of the value of your latest monthly payments go to interest, we’d recommend waiting toward the end of the month — as this will reduce your interest payment a little on your next pay period. This method takes patience, but your overall savings will build up to a large amount over time!

  • Make an extra annual payment.

    Although this won’t make your payoff date come as quickly as making monthly payments, every little bit counts! And, the advise to make the payment toward the end of a month still stands.

  • Put bonuses and unexpected income toward your loan.

    Occasionally, you’ll receive extra during the holidays or through a special turn of events. Why not invest in yourself and your financial situation by putting it toward your mortgage? Your future self will thank you!

  • Refinance the loan with a shorter-term mortgage.

    Shorter term loans typically come with lower interest rates. If this is a solution you would like to explore, let’s see if we can come up with a creative option that meets your needs. Contact your local Benchmark branch to discuss your options.

  • Pay off the mortgage completely — evaluate your financial position with a financial planner or loan officer.

    Benchmark would welcome the opportunity to talk with you about this. We want you to make the best decision possible for you and your financial goals! Contact your local Benchmark branch to learn more.

Ultimately, everyone’s situation is unique, which means everyone’s method to a mortgage payoff will be different. But with some hard work and financial strategy, it is possible! We’d love to help you move toward better financial well-being overall.

At Benchmark, we are committed to helping you with home mortgage loan needs and decisions that set you up for future success. To learn more, contact your local Benchmark branchcontact us todaycall me or contact me today. We would be honored to provide you with our famous, excellent service!

Is Buying A Home Really More Expensive Than Renting?

by Jason Haeger

If you rent, you probably have good reasons. I bet that “paying my landlord’s mortgage”, “noisy neighbors”, or other caveats aren’t among them. Look, we know that owning isn’t right for everyone. As much as we write about why owning a home is better than renting, there are legitimate reasons for choosing to rent. For one thing, while renting may require a deposit, it doesn’t require a down payment. Renting is often the first choice for someone who wants or needs to be able to move with minimal hassle, or for someone whose focus is too occupied to be concerned with managing repairs and maintenance.

Whatever your reason, there is little doubt that most people probably want to eventually own their own home, even if not yet. If your reason is financial, you may think that buying is more expensive than renting. On one hand, you may have a point. On the other hand, the long view casts a long shadow of doubt on that assumption. Even if you plan to rent for awhile longer, educating yourself is always a good idea, especially if you plan to one day own, rather than rent, your own home.

Let’s talk about it.

Costs of Buying and Owning

Let’s talk about equity.

Before we jump into the actually costs of buying and owning your own home, It would be shortsighted to not discuss how equity plays into the equation. For starters, if you don’t know what equity is, it is just the portion of a whole asset that you own. It can be calculated by subtracting the remaining loan balance from the total value of the home. This is a major reason why a Self-Made Millionaire Told Millennials To Buy A Home three years ago.

With every mortgage payment, a portion of it goes toward the principal balance of the loan. (See: Why Buying Is Investing) This means that, without any extra effort on your part, your net worth grows by the amount of the principal portion that you pay each and every month. How much of your rent adds to your net worth? Oh.. sorry, I didn’t mean to make you feel bad. When you rent, you add to your landlord’s net worth, not your own net worth. Hey, at least your money is helping someone, though, right? Let’s move on.

Do you need a lot of cash for a down payment?

That depends. How much how do you want to buy? How much do you consider to be a lot? The truth is, you don’t need as much as traditional wisdom may have led you to believe. In my last article, Owning A Home May Already Be Within Reach, I talk a little more about that. There are conventional loan programs that require as little as 3% down, depending on your particular scenario. Assuming a $250,000 purchase price, 3% amounts to $7,500. However, a down payment is just putting your own investment dollars into the transaction. A down payment reduces your liability, and while you will no longer have the cash in hand after the transaction, it will not reduce your overall net worth. On the contrary, it could be the vehicle that gets you on your way towards a higher net worth than you would have access to otherwise. See a previous article we published, called Homeowner Average Net Worth 3,600% Higher Than Renter.

What about closing and other transactional costs?

Ah, closing costs. Sometimes surprising first-time home buyers, the purchase of a home requires a lot of moving parts, and many parties who work together to make this transaction of real estate possible. Apply the economic principle of “There is no such thing as a free lunch” to the purchase of a house, and it’s logical, really. So how much are they? That all depends.

Generally speaking, home buyers will pay roughly 2-5 percent of the purchase price in closing and transactional costs. These can be seen as true costs, as they do not translate to equity in the purchased home. There is almost always room for negotiation on these, so it’s worth talking to your loan officer about this ahead of time. It is their job to put together a mortgage package that fits nicely with your own personal financial situation and goals.

There will be other costs of ownership.

When the plumbing needs work in your apartment, you know what to do. You either call your landlord, a property manager, or the maintenance number. At some point, someone will come to your apartment to do the necessary repairs. Simple.

When you own your home, you are on the hook for arranging the repairs yourself. Sure, there are home warranty packages you can purchase that cover certain repairs, but you’re on the hook for setting that up, too. Don’t be intimidated by this, though, because home warranty sellers are anxious to trade their promises for your hard-earned money. The debate about whether a home warranty is worth it or not is for another post.

Another option is to find your own contractor. This sounds like more work, but this is actually a huge advantage. Want to upgrade? Go for it. Find a killer deal? You’re free to call whoever you like. Depending on the repair, you may be able to DIY and learn a new skill while saving your money.

No matter which way you go about it, repairs and maintenance costs will come directly from your pocket. Do not gloss over this fact when considering how much house you can afford, or you might find yourself “house poor”. Remember, however, that homeownership is not a quick win. It is a long game of wealth accumulation. That’s probably not even the top reason why people buy homes. What’s your motive?

Opportunity Costs

Like every other decision you make, there is an undeniable opportunity cost to buying a home. When you buy a home, you’ve lost access to the money that you used as a down payment. Maybe you wanted to use that money to pay for college, start a business, or save for a rainy day. Then again, maybe you recognize that the better option for you is to put it into a real asset like a home.

Another factor to consider is flexibility. You lose the opportunity to move in a hurry. If location flexibility is important to you, it can be beneficial to only have to pay a fee to break the rental contract and go at your convenience. If you own a home,  you will either need to keep paying the mortgage for a home you’re not living in while paying for rent or a new mortgage for a home in your new location, or you will need to coordinate the sale of your home with your planned move. When you sell, you are taking the equity you’ve accumulated in the home in cash, which is difficult to see the down side of. You can also potentially keep your previous home, and make it available to rent to someone who could then help pay the mortgage for you with your asking rent price.

Your situation is your own, and it’s your responsibility to decide what is best for you. I sincerely hope you find this article helpful when you make that decision.

Costs of Renting

There is no such thing as a free lunch, and there is also no such thing as a free home.* When you rent, the most obvious cost to you is just that: rent. Whether you think your rent is a good deal, or whether you think it’s too high, the rent must be paid. Your rent helps pay for your landlord’s mortgage, adding to his (or her) net worth. Unfortunately, there is no long term fiscal benefit to the rent payment. It especially doesn’t help when the rent price goes up.
* Unless you live with family.. or other less common exceptions.

Lack of Privacy

Since your home is not your own, you are at the mercy of your landlord, their property management, and local laws for your personal safety and security. Have you ever heard your neighbors arguing through the wall? Has a party gone on in the unit above you until well past a reasonable hour? Do the neighbors’ kids not understand what ‘courtesy’ means?

See: Owners Enjoy More Privacy and Security.

I’m not saying that buying means you get to choose your neighbors, but you can at least choose your neighborhood, and buy a single family home with no attached neighbors, if that’s what you want to do. If you buy a house with a yard, you have a green space to enjoy without having to go to a public park or courtyard just to enjoy the fresh air.

No Personalization

If you rent, you give up the option to really make your (well, your landlord’s) home your own. Do you want to change the paint color, wallpaper, tile, or carpet? You have to either get permission, do the work yourself, or both. With the costs involved, you probably won’t want to invest in your landlord’s equity with your own cash. I don’t blame you, especially since one of the benefits of renting is its transient nature.

Opportunity costs

Renting means giving up any future possible financial gains on your residence, because it’s not yours.  (see: This New Year, Reach Your Dream of Homeownership for a little math on this). It’s possible that you can see any of the previous costs as opportunity costs as well. With a financial stake in your community, you will be more invested in the culture and politics of your neighborhood and your hometown. This is not to say that you cannot also be personally invested if you rent, but that may come from owning or operating a local business rather than renting a home.

The Answer Is Ultimately Subjective

“Expensive” is relative. Expensive compared to what? Does buying a home come with a lot of cost, including upfront costs? Yes. Is it cheaper to pay rent, without gaining equity, for decades? No. However, is the cost worth it to you? Ultimately, that’s the question, isn’t it? I don’t know your particular life circumstances, goals, or timelines. However, you do. This is an answer you will need to arrive to on your own, based on your own priorities.

More recommended reading: Rent or Buy? A Fool, Do Not Be

If you are curious to see specific numbers to bring clarity, you will want to talk to one of our mortgage professionals. At Benchmark, our loan officers specialize in tailoring the best matching loan arrangement for your personal goals and financial situation. Find your branch, and contact them for more information.Contact us today. It would be our honor to help you decide what’s best for you.Please call me or request a call. I would be honored to be part of helping you decide what’s best for you.

 

Benchmark brings you home.

benchmark circle icon

Savings could add up with an interest rate reduction refinance loan.

What is an IRRRL VA refinance loan?

by Austin Cox

An IRRRL, or Interest Rate Reduction Refinancing Loan, is a quick VA refinance option with fewer qualifications and less paperwork than other refinance loan options. It’s meant to be a quick and non-complicated refinance option for qualified VA homeowners, and there is no appraisal requirement. Read more

Read more