Are you a renter with plans to eventually own a home? You might want to reevaluate your timeline.
As a renter, you probably know all too well that your rent might (and probably will) increase every year while you might not see the same increase in your income. According to the National Association of REALTORS, between 2009 and 2014, nationwide rents rose 15%. While 15% doesn’t sound like a lot, if you aren’t also getting a 15% raise, you have to make up for the rent change with money you’ve been saving for other things.
The “renter’s trap” occurs when you end up spending the money you’d like to save for a down payment on rent, which forces you to continue renting.
It sounds like an easy trap to avoid, but due to a lack of knowledge about alternative loan programs, many people think that they have to continue renting because they can’t afford to buy a home. Thankfully, the days of the 20% down payment requirement are gone. There ARE loan programs available that let home buyers put considerably less down. In fact, I’ve seen programs that require as little as 3% down, and if you’ve been saving for a while, you might have that already.
The first thing you should do is speak to a lender about your financing options. They vary depending on a variety of factors, including income, military involvement, whether you’re a first-time homebuyer, and the type of home you want to purchase.
If you have steady income and plans to stay in the area for a while, you should look into your options. Don’t get stuck renting for years when you could own a home today.