Many renters are taking advantage of falling home prices and buying homes. (Photo: iStockphoto)
As home prices continue to fall, the gap between the cost of owning and renting a home is closing. An Associated Press analysis found that the difference between the monthly mortgage payment on a median-priced home and the median rent has fallen by two-thirds to $221 in the past three years. Of course, many people want to buy, but can’t (see earlier post).
But if you can qualify for a mortgage and are looking to jump into homeownership, when is the best time to buy? For me, that time came last November. Not only had some important financial matters fallen into place, but I was also growing out of the three-bedroom rental where I had lived with my two teens for the past three-and-a-half years.
Getting pre-qualified
Approaching the home search as logically as possible, I first went to a local bank that was known to be friendly for business owners (as a self-employed freelancer, all my income comes from my writing business). I was pre-approved for a loan within a week and a half. I already had a Realtor, and she gave me access to the multiple listing service in Erie, Pa., which I screened for location. I wanted to stay in the school district where I currently lived so my son could continue attending the local public high school.
Over a week or so, I screened the list down to seven possibilities and arranged to visit them with my Realtor on a Saturday afternoon on the weekend before Thanksgiving. While a couple of the homes were possibilities – and a couple of the homes were definitely not possibilities – I didn’t fall in love until the last house. It had plenty of room – four bedrooms and three bathrooms – was completely updated and had been on the market since the summer. What sealed the deal for me was the creek meandering through the back yard and Lake Erie frontage four blocks down the street.
Making an offer
I went back – with my family in tow – on Wednesday and by Friday, the day after Thanksgiving, was in my Realtor’s office drawing up a contract. While my realtor warned me that the buyer had rejected offers lower than mine, I was comfortable with my offer because I had no house to sell. I was also willing to negotiate, but was prepared to walk away if the price was too high.
At 6 p.m. that night, I got a call from my realtor. I had a house! There was no counter offer, and I ended up closing less than three weeks later. I moved in January after getting some minor things fixed and buying furniture. I couldn’t be happier, and for me, the decision to buy a home came at the right time.
Readers: Are you seeing mortgage payments in your area move closer to rental payments? If you’re renting, are you considering buying? —Amy E. Buttell