Renting vs. Owning a Home in Biloxi, Mississippi
Choosing to rent or buy a home can be quite a large decision, especially if you are doing any of these processes for the very first time. There are advantages and disadvantages to choosing either option. It turns out that a larger percentage of households in America are choosing to rent rather than buy. There are numerous factors to consider when making the decision between renting or owning.
You first have to assess:
- What you are able to afford?
- The length of time you aim to stay in that home
- If you would prefer to be flexible or have stability
- If your financial status is able to handle home maintenance or repairs
- What your family, career and financial goals are
The majority of rental properties typically have a security deposit requirement. The aim of this deposit is to ensure the landlord is protected against any damage the renter causes. It is customary to place the first and last month’s rent down as payments when a lease is signed. When making the decision to rent a home in Biloxi, Mississippi, you have to understand that your monthly payments for rent might not include utilities like internet, cable, gas, electric or water.
For those looking to own a home, the largest recurring cost associated with ownership is the monthly payment to service a mortgage. This payment would include the interest as well as the principal. It is possible for payments to either rise or fall, however, this is dependent on the loan having a variable rate. It could also be dependent on any changes made to the property taxes. Most first time buyers are caught out by the fact that their monthly payments might be higher than they initially calculated. This could be because anything lower than 20% of the actual home value as down payment would cause the lender to place in a requirement needing you to buy PMI or private mortgage insurance.
As a buyer, you will also have to factor in the fact that things such as home inspections and repair quotes will have to come out of your pocket. Most realtors advise placing 1% of the total home value as earnest money, in a bid to help alleviate costs associated with owning a home. When looking to own a home, you have to understand that it is expected that you place a significant down payment. This could be anything between 3 to 20% of the home’s value. You should also be conscious of the fact that you could be purchasing a house in an HOA or homeowner’s association, and Biloxi is known to have quite high HOA dues. This monthly expenditure which covers things such as exterior maintenance, community amenities, and landscaping has to be factored in.
Mortgage vs Rent: Actual Costs
Most people believe that renting or buying a home is simply down to ownership, however, there is a lot more to the argument. Below are a few key differences.
Purchasing a home can help you build equity
Homeowners are able to leverage the equity their house accumulates over a period of time. This basically means when the value of a home rises, they are able to get a higher price should they sell. Owning a home using a fixed rate plan means you do not have to stress about the typical rise in rent prices. Given the fact that rates are quite low at the moment, it can mean lending money is a lot less expensive. The average rent price for a 3 bedroom house within the Biloxi city limits is $1,000 per month. So, you would be spending $120,000 on rent for 10 years. This calculation is based on the premise that rent rates would remain constant and that isn’t usually the case as Biloxi has seen a 3.5% rise in rent prices over the last 3 years.
When it comes to purchasing a home, you have to take into account the average credit score (650) for the state. With lender fees included the average monthly payment is $1,480 on a fixed rate, you could spend $176,160 on a $200,000 home.
Cost of home repairs
A home will need maintenance and repairs over time, this is true even when you are renting. It is simply that these are the responsibility of the landlord. For example, should the refrigerator or heater break down, the landlord will have to fix it. When you own the home, you will be responsible for these repairs, as well as any other seasonal maintenance. You have to understand that these costs can pile up quite quickly.
Friendly real estate market
If you are interested in owning a home rather than renting in Biloxi, you will be glad to know that the city and its environs have a large range of properties for prospective buyers to select from. Prices have remained stable over recent years, growing on average 3.5%. You have to ensure that you get a good realtor that works hard to get you not just your dream property, but a good deal like Thumb Print Properties
Leasing agents and potential landlords typically conduct credit checks on rent applicants as a way to analyse their financial capability. Think of a credit score as a report card detailing how responsible you have been and how likely you are to be in the future. Nobody wants to rent out a property to someone that is less likely to pay as and when due. Most business or individuals renting properties to applicants want to see credit scores around 620 or more. Having a low credit score might make it harder for you to get the rental property you want.
A credit requirement is even more important when it comes to buying a house. You will have to prove to the lender that you have the ability to pay your monthly dues and are less likely to default. Given that the average credit score in the state is around 650, you will have to match this credit score or better to be able to get a better deal. As stated earlier, a down payment will be required by the lender and most lenders prefer 20% which can be difficult for first-time buyers to achieve, especially if you are just in the formative years of your credit score. That being said there are other avenues you can look at when purchasing a home. The Veteran Affairs Home Loan is a great place to start if you have been in active service. It can cover up to 50% of a home loan with the value capped at $45,000.