8 Signs You’re Ready to Stop Renting and Buy a Home

Buying a home is a major decision, and you want to make sure you are ready before diving right in. Here are eight signs that you’re ready to make the switch from renter to homeowner.

  1. You’re tired of rising rent prices.
  • Increasing rent rates makes formulating a budget extremely difficult, and even harder to save for other financial goals
  • You want to be building equity for the future, not pouring money into a bad investment month after month.
  1. Your credit score has improved.
  • Improving your credit score will help you qualify for a mortgage
  • You won’t require as large of a down payment
  • The better the score the better the interest rate and loan terms in general
  1. You’re good at managing debt.
  • Keep in mind your debt-to-income ratio: add up all of your monthly expenses and debts and divide by your gross monthly income
  • Most lenders require a ratio of no more than 43%
  • Some conventional loans allow up to 50%
  1. You have enough set aside for the extra costs of owning a home
  • Make sure you are thinking about emergency funds for unexpected expenses
  • Budget property taxes and routine maintenance costs
  1. You can afford the down payment and closing costs.
  • Most conventional loans require a 5% down payment
  • Some FHA loans, mortgages insured by the Federal Housing Administration, require only 3.5% down
  • Closing costs could be another 2-7% of the property’s sale price, but this can sometimes be negotiable
  • Search for grants and other loan programs, or better yet contact us to find a loan officer to find what will work best for you
  1. You’re ready to settle down in one place.
  • With all of the upfront costs, you want to make sure you will be happy where you are settled
  • Having job security is key, as you don’t anticipate moving in the next few years.
  1. You’re going through a major life change.
  • Getting married, having a growing family, or getting a new job make for common incentives to prospective homeowners
  1. You know what you want.
  • Is there a specific neighborhood or school district that you want to live in?
  • Think about the different types of homes: houses, townhouses, condos, etc. 

Ready to leave renting behind?

Contact us to find out what’s next! Call Michael Olear at 418-9959 any time for a free consult or assistance with real estate related questions.


Do you know the cost of renting vs. buying? [INFOGRAPHIC]

Do you know the cost of renting vs. buying? [INFOGRAPHIC]


Some Highlights:

  • Historically, the choice between renting or buying a home has been a close decision.
  • Looking at the percentage of income needed to rent a median priced home today (30%) vs. the percentage needed to buy a median priced home (15%), the choice becomes obvious.
  • Every market is different. Before you renew your lease again, find out if you could use your housing costs to own a home of your own!
2016: Homeowner’s net worth will be 45 times greater than a renter

2016: Homeowner’s net worth will be 45 times greater than a renter


Every three years the Federal Reserve conducts a Survey of Consumer Finances in which they collect data across all economic and social groups. The latest survey, which includes data from 2010-13, reports that a homeowner’s net worth is 36 times greater than that of a renter ($194,500 vs. $5,400).

In a recent Forbes article the National Association of Realtors’ (NAR) Chief Economist Lawrence Yun predicts that in 2016 the net worth gap will widen even further to 45 times greater.

The graph below demonstrates the results of the last two Federal Reserve studies and Yun’s prediction:


Put Your Housing Cost to Work For You

Simply put, homeownership is a form of “forced savings.” Every time you pay your mortgage you are contributing to your net worth. Every time you pay your rent, you are contributing to your landlord’s net worth.

The latest National Housing Pulse Survey from NAR reveals that 80 percent of consumers believe that purchasing a home is a good financial decision. Yun comments:

“Though there will always be discussion about whether to buy or rent, or whether the stock market offers a bigger return than real estate, the reality is that homeowners steadily build wealth. The simplest math shouldn’t be overlooked.”

Bottom Line

If you are interested in finding out if you could put your housing cost to work for you through homeownership, meet with a real estate professional in your area who can guide you through the process. For more information, please contact The Olear Team today!

Renters: It’s about to get a lot worse

Renters: It’s about to get a lot worse


We often promote homeownership over renting when a family is ready, willing and able to purchase. There are both financial and non-financial benefits to owning a home of your own. Based on the headlines below, many news outlets agreed with us after they reviewed a recent report from the Harvard Joint Center for Housing Studies and Enterprise Community Partners.

The study states that the number of households spending 50 percent or more of their income on rent is expected to rise by over ten percent in the next decade. They concluded:

“Overall, this white paper projects a fairly bleak picture of severe renter burdens across the US for the coming decade.”

What do other experts think of the report? You can tell by the headlines they chose to introduce their stories:

“Renters, get ready to take it on the chin” – CNBC

“The rent crisis is about to get a lot worse” – Bloomberg Business

“Renters will continue to struggle for the next decade” – World Street Journal

“Why the renting crisis could be about to get a lot worse” – Fortune Magazine

“Soaring rents are a problem that will only get worse” – Business Insider

“High rents are here to stay” – The Real Deal

Bottom Line

If you are thinking about buying a home and are financially positioned to do so, now may be better than later.

You can download the entire white paper here: Projecting Trends in Severely Cost-Burdened Renters

For more information, please contact The Olear Team today!

Buying a home is better way to produce wealth than renting

Buying a home is better way to produce wealth than renting


According to the latest Beracha, Hardin & Johnson Buy vs. Rent (BH&J) Index, homeownership is a better way to produce greater wealth, on average, than renting.

The BH&J Index is a quarterly report that attempts to answer the question:

Is it better to rent or buy a home in today’s housing market?

The index examines that entire U.S. housing market and then isolates 23 major markets for comparison. The researchers use a “’horse race’ comparison between an individual that is buying a home and an individual that rents a similar quality home and reinvests all monies otherwise invested in homeownership.”

Ken Johnson, real estate economist and professor at Florida Atlantic Universityand one of the index’s authors states, “The U.S. as a whole is still in clear buy territory. The cities of Cincinnati, Chicago, Cleveland and New York City are deep into buy territory.”

Miami and Portland had been inching closer toward renting being the better option but have “pulled back from the edge.” Johnson goes on to say, “that’s a good sign for home pricing as it suggests prices are going to level off in these metro areas.”

Bottom Line

Buying a home makes sense socially and financially. Rents are predicted to increase substantially in the next year, so lock in your housing cost with a mortgage payment now. For more information, please contact The Olear Team today!

Don’t get caught in the renter’s trap

Don’t get caught in the renter’s trap

Dont-Get-Trapped-KCMThere are many benefits to homeownership. One of the top ones is being able to protect yourself from rising rents and lock in your housing cost for the life of your mortgage.

The National Association of Realtors (NAR) released their findings of a study in which they studied “income growth, housing costs and changes in the share of renter and owner-occupied households over the past five years in metropolitan statistical areas throughout the US.”

Don’t Become Trapped

The study revealed that over the last five years a typical rent rose 15 percent while the income of renters grew by only 11 percent. If you are currently renting, this disparity in growth could get you caught up in a cycle where increasing rents continue to make it impossible for you to save for a necessary down payment.

The average renter in the United States pays 30 percent of their income on housing compared to that of a homeowner who can expect to spend 15 percent.

In many metro areas the percentage of income spent on housing is even higher and continues to rise every year. Like in San Francisco, CA, where the average renter spends 59 percent of their monthly income on housing or nearly 65 percent in Boston, MA.

Homebuyers who purchased their home over the same five-year period locked in their housing costs and were able to grow their net worth as home values have increased and their mortgage balances have gone down.

Know Your Options

Perhaps, you have already saved enough to buy your first home. HousingWire reported that analysts at Nomura believe:

“It’s not that Millennials and other potential homebuyers aren’t qualified in terms of their credit scores or in how much they have saved for their down payment.

It’s that they think they’re not qualified or they think that they don’t have a big enough down payment.” (emphasis added)

As we have reported last week, over 60 percent of Millennials who recently bought a home put down less than 20 percent; 36 percent put down less than 5 percent. Your dream home may be more attainable than you ever imagined!

Bottom Line

Don’t get caught in the trap so many renters are currently in. If you are ready and willing to buy a home, find out if you are able. Have a professional help you determine if you are eligible to get a mortgage.