ATTN: RENTERS
ARE YOU READY
TO BUY YOUR
FIRST HOME?
RENT
VS
OWN
What Should I Do?
Continue Renting or Buy a Home Now?
If you’re currently struggling with the decision of whether or not to buy a
home, we understand! The rent versus buy decision can be confusing and
intimidating.
This guide was designed to help you figure out if you should buy a home
now or continue to rent. Let’s jump right in and see what option works
best for your situation.
The Pros and Cons of
Renting vs. Buying
RENT
BUY
PROS
PROS
• Renting does provide flexibility and
Home equity accrues and helps you
ability to move easily in a shorter
build wealth
amount of time.
Cheaper in the long run and there’s
• Amenities are included on the property
something to be said for stability.
• Rental properties include property
Enjoy life with a private place of your
management and maintenance staff
own.
(for a fee).
No limitations on decorations, the
possibilities are endless because you
CONS
make the rules.
Once your lease is up and you decide
A percentage of your monthly home
to move, you walk away with only your
payment goes towards the principal.
security deposit (best case scenario).
Therefore, you’re saving money as you
If the landlord decides to sell or
increase the rent, you could be forced
also pay for the interest on the money
to move.
you’ve borrowed.
Many rental properties have restrictions
You’ll be able to pay off your mortgage.
that can limit your creativity and
Mortgage rates are still very low with real
lifestyle choices.
estate values improving. If you review
Could be stuck in a lease with rising
mortgage rates over the past 40 years,
rent.
rates are still well below the historical
No sight of retirement — rent
average.
payments never stop…ever.
Community ties—you’ll have the option
It may be hard to build up your
to have an impact on your community
community if you’re moving around
with your taxes benefiting local schools,
trying to find the best rent in your
parks, and legislature.
area (not to mention, moving can get
expensive).
CONS
• You’re responsible for interior and
exterior maintenance.
• Difficult to move to new locations.
• Extra costs such as repairs, taxes,
insurance, etc.
Think About This!
Purchase your own home, not someone else’s!
Unless you’re living with a relative rent-free, when you pay rent, you’re
paying a mortgage—your landlord’s.
SAMPLE SCENARIO: You put down 5% on a 2-bedroom, 2-bathroom
home that costs $200,000. Based on an interest rate of 3.875% (3.956%
APR). Breaking down a conventional 30-year mortgage to the monthly
payments, you would probably be paying around $893 per month (note:
this is just for example only—your Home Loan Specialist will give you an
exact amount based upon interest rates, loan terms, etc.). Historically,
home values typically increase over time so after 15 years, you would have
$144,927 of equity built up, plus or minus any property value change of
the home. Keep in mind, there are maintenance costs associated with
homeownership, but you’re investing in your own asset.
Renting a 2-bedroom, 2-bathroom apartment might cost you more over
time. As property value and taxes go up, landlords will increase your rent.
Granted, you don’t have to pay for maintenance, but with over $144,000
of built up equity, the maintenance cost of owning a home don’t seem too
unreasonable.
RENT
BUY
Net Monthly Payments
Net Monthly Payments
$1,300
$893*
Rent Paid at 15 Years
Principal Paid at 15 Years
VS
$234,003
$65,754
Total Equity
Total Equity at 15 Years
$0
$144,927
*Sample scenario monthly payment above includes principal and interest only. Mortgage Insurance, property taxes
and property insurance will be additional payments. Scenario based on credit score of 740. Rates as of 11/6/2019
It Doesn’t Pay to Wait
Rent prices continue to go up month-over-
month in cities across the United States.
Homebuyers who enter the market now have
a greater chance of building long-term wealth
compared to renters or those who wait to buy.
If you continue to rent, over time you could
really miss out on having a house as an asset.
Two main factors that can affect how much
you pay for a house are: interest rates and
home values.
You Deserve Honesty
In order to effectively weigh your options of renting versus buying a home,
you need to have a clear idea of what the total cost of a home will be.
Knowing the total cost of a loan is valuable, but is often seen as an add-on
service to your average mortgage lender.
We are far from average!
At CFI, we take the time to provide you with a detailed financial analysis.
We use different tools and calculators that make comparing your
mortgage options a simple process. We’ll provide you with a customized
mortgage report that will include financing options, the differences in
monthly payments, the total cost of the loan over time, and your out-of-
pocket expenses.
Your mortgage is a long-term financial commitment. When making big
decisions, it’s always important to keep your end goals in mind.
Are You Ready to Become a Homeowner?
Questions You Should Ask Yourself
If you’re wondering if you’re ready to become a homeowner, sit down and
ask yourself these important questions:
1. Do I have enough money saved up? Looking for a new home is the fun
part. Having money set aside for unexpected changes is the crucial part.
Financial experts recommend having an emergency fund of at least 3-6
months of living expenses set aside for any big changes that can occur in
your life.
2. How long do I plan on living in this house? Having an idea of how
long you plan to live in your home should be considered when deciding
to purchase. The longer you live in a home, the more it’s worth. You
are purchasing an asset that typically grows in value over time, despite
occasional dips that can occur in the local economy. It will take some time
to build up equity, but the financial benefits outweighs renting by a long
shot.
3. Do I have a steady job? Having a stable source of income will make
homeowning much easier. Making your mortgage payments on time can
improve your credit score as well.
4. Am I committed to a specific location? Location is often one of the
first things potential homeowners think about when looking to buy. If you
plan on staying in your area for a while, investing in a property may make
financial sense. However, If you plan on moving soon, you may want to
hold off on buying a home. A well versed real estate agent can help you
identify the best neighborhoods in your area and impart knowledge of the
local housing marketing upon you to help you make an informed decision.
5. If I wait, am I prepared to continue pay rising rent prices?
As mentioned previously, the cost of renting has continued to rise. If you
decide to forgo buying a home now or wait, you will be affected by those
rising prices.
Have you answered all these questions? If so, it’s time to get started on a
plan to buying your very first home!
5 Steps to Prepping for
Buying a Home
1. Don’t open any new lines of credit. Opening a new credit card right before
buying a home can really cost you when it comes time to apply for a home
loan.
2. Shop around for a real estate agent. Choose an agent that is familiar with
your local market, can help you negotiate the best deal, and has a great track
record. Try to find someone you are comfortable talking to and can work with
your personal homeownership goals. We have tons of great suggestions for
you!
3. Get Approved. Become a Next Step Approved Buyer by getting pre-
approved. This step will save you time and money. Getting pre-approved is one
step beyond getting pre-qualified. It can help homebuyers outbid cash offers
and the opportunity to close faster. You’ll show sellers that you are serious
about your offer and you won’t back out later due to financing issues.
4. Figure out what you can afford. Having a new home and not being able
to enjoy your life is no fun! After buying a home, you should have room in your
budget to indulge in some of your favorite pastime. Your mortgage payments
should be no more than 25% of your take-home pay.
5. Save for a down payment. It’s ideal to have 20% saved to put towards your
down payment, but there are many funding options! For first-time homebuyers,
many times 5% will do the trick, depending on the type of loan you get.
Make an Informed Financial Decision
that will yield Long-Term Benefits
Buying a home is a personal decision that will take time. We understand
that taking the leap into homeownership can be scary. Because of that,
renting may look like a better deal than buying. It is important to look into
the overall cost and benefits At face value it may look like a better deal to
rent than to buy, but it’s important to know all your options, so you don’t
get in over your head.
In the end, it’s up to you on whether you will start building long-term
wealth by paying your own mortgage and not your landlord’s.
If you’re interested in learning more, we are here to answer any questions
you may have. Many other lenders curb the demands and inquiries of first-
time buyers to automated systems. If you call on CFI, you can be sure that
you will talk to a LIVE person. Get advice from an expert who will take the
time to help educate you and explain the process! At CFI, we handle all
loan applications with a HUMAN TOUCH.
860 N SR 434, Altamonte Springs, FL 32714
NMLS ID # 112516 (www.nmlsconsumeraccess.org)
(407) 986-4036
License(S): Alabama Consumer Credit License 21433 | Colorado Mortgage Company Registrant | Dc
Mortgage Dual Authority License Mlb112516 | Arkansas Combination Mortgage Banker/Broker/Servicer
License 101560 | Florida Lender License Mld129 | Florida Mortgage Lender Servicer License Mld1715 |
Georgia Residential Mortgage Licensee 21045 | Illinois Department Of Financial & Professional Regulations
Mb.6761311 | Kansas Mortgage Company License Mc.0025032 | Louisiana Residential Mortgage Lending
Licensee | Maryland Mortgage Lender License 18626 | Michigan 1St Mortgage Broker/Lender Fl0017515 |
Mississippi Mortgage Lender 112516 | Missouri Residential Mortgage Broker License 19-2051 | New Mexico
Mortgage Loan Company | North Carolina Commissioner Of Banks L-181551 | Pennsylvania Mortgage Lender
License 32852 | Oklahoma Mortgage Lender License Ml010110 | South Carolina Bfi Mortgage Lender/Servicer
Mls-112516 | Tennessee 109381 | Texas Sml Mortgage Banker Registrant | Virginia Mortgage Lender/Broker
Mc-5371
Texas Complaints: Consumers Wishing To File A Complaint Against A Company Or A Residential Mortgage
Loan Originator Should Complete And Send A Complaint Form To The Texas Department Of Savings And
Mortgage Lending, 2601 North Lamar, Suite 201, Austin, Texas 78705. Complaint Forms And Instructions
May Be Obtained From The Department’s Website At www.sml.texas.gov. A Toll-Free Consumer Hotline Is
Available At 1-877-276-5550.
The Department Maintains A Recovery Fund To Make Payments Of Certain Actual Out Of Pocket Damages
Sustained By Borrowers Caused By Acts Of Licensed Residential Mortgage Loan Originators. A Written
Application For Reimbursement From The Recovery Fund Must Be Filed With And Investigated By The
Department Prior To The Payment Of A Claim. For More Information About The Recovery Fund, Please
Consult The Department’s Website At www.sml.texas.gov.