Next Gen Series: Rent or Buy?

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When the question of owning a home versus renting arises for our adult children and grandchildren, we can pass along our knowledge as homeowners to help them figure out how ready or not they are. Discussion points to consider are:

Determine if the young adult is ready for the added responsibility

  • Check your credit before beginning the home buying process to ensure nothing is hindering your credit score.
  • Get pre-approved for a mortgage to help identify any potential obstacles as well as make yourself more competitive in the market.
  • Write out a list of “must haves,” “nice to haves,” and “nice to have in the future.”
  • Do you know what you want in terms of a neighborhood?
  • Are you willing to live in this area and home for the next 5–10 years?
  • Do you have the time and willingness to maintain a property or the budget to pay service providers to do so for you?
  • Consider hiring a real estate agent who specializes on the buy side.

Determine the right budget

  • Do you have an appropriate amount saved for a down payment?
  • Does the monthly mortgage payment fit within your budget?
  • Do you have an appropriate emergency fund saved?

Determine the right financing and payment options

  • Shop around for the right type of mortgage. The 30-year fixed rate mortgage is the most common, but there are 15-year fixed-rate mortgage loans with terms that can save a lot of money over the life of the loan, as well as 7-year ARMs that may be more appropriate in some cases.
  • Would a family loan make the most sense? See a comparison example of a $400,000 home:

Buying a first home is a commitment. Our job is to help our children and grandchildren be as prepared as possible and know what they are getting into.

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