March 14, 2024
Some borrowers are not sure if they are truly ready to buy a house with an FHA mortgage.
Not in the financial sense. For this article, we do not mean “ready” in the sense that a borrower has saved a down payment, worked hard on credit, and has a budget plan that includes the new mortgage payment.
In this article, being “ready” means deciding to stop renting and start owning a home.
Running The Numbers Before You Shop
Get a calculator ready if you need to answer the rent-versus-own question. Compare the current rental options with the cost of owning. Ask yourself, how much is your rent? What about renter’s insurance, monthly utility expenses, and other costs like parking and trash removal?
How does that amount compare to the costs of owning a home? For some, it’s not the dollar amount but the security of not dealing with a new lease, increased rent, changes in landlords, etc. All these things are a form of currency.
Comparing Neighborhood Types
There are plenty of mixed-residential communities that combine rental properties and single-family houses. But not all communities are so blended. What to do when you find more separation between rental neighborhoods versus those where most homes are owned and not rented?
Much depends on personal preference.
For some a priority is finding more traditional community. Do you want to know your neighbors and make the area your life, long-term? For some buying a home is the key.
Do you seek community? Do you want a neighborhood with less turnover and more stability? Owning instead of renting is a smart choice? Do you like the rental lifestyle but hate the rent hikes? Buying a condo unit with an FHA mortgage is one option.
How Close Are You To The Essentials?
Choosing where to live also means deciding how much you are willing to commute to work and school, as well as to child care, healthcare, and shopping. Another issue some consider? Proximity to major traffic issues on busy roads.
For some, these issues aren’t as important, and many people may choose to continue renting because they are not unhappy with their location.
But for those with specific needs for nearby services that are currently too far from home, buying closer to work or school makes sense, especially if there aren’t many rentals available near those destinations.
Will Your Apartment “Go Condo?”
Some renters worry about losing their lease, others about being rent-hiked or otherwise priced out of their rental unit, and what about a landlord who decides to take the rental property and convert it into condo units?
Your landlord may or may not be interested in inviting current tenants to buy a condo unit. Either way, the current occupants face the “Move out or buy the condo” dilemma.
But if condo living is not for you, and if you do not want to keep renting, buying a home with an FHA single-family mortgage may be a smart option.
An FHA mortgage has a low downpayment requirement of 3.5% which can help those who are looking for an affordable home with less money out of pocket up front. Have you decided to “go condo?” If so, the FHA has a condo loan program you should consider.
Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for FHANewsblog.com where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.
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