People often ask me, “should I rent or buy?” Although each situation is unique, buying is typically more beneficial. Here are some key reasons why.
Renting in Hawaii
“Why pay for someone else’s mortgage when you could be paying for your own.” I am sure you have heard this before, and although it may sound repetitive, it is an extremely accurate statement. If you are going to be making a monthly payment on a home, shouldn’t it be towards one that you own? When renting or owning a home, there are always costs involved. With renting, there are fewer initial costs and fees, but rent is constantly on the rise. When you calculate the cost paid in rent considering its appreciation, it adds up over time and often surpasses the costs of buying a home. If you are staying somewhere for a short period of time, typically less than three years, rent may be the better option for you. Once you decide to rent for longer periods, you end up spending more in the long haul than if you were to buy. Renting offers little to no benefits for you financially. You receive no tax benefits, and it does very little for your credit. This is why you should understand some of the benefits of buying a home.
Buying a Home in Hawaii
Buying a home may have more initial costs and responsibility, but it is an investment opportunity. When buying a home, you are typically able to qualify for a home loan which means you can purchase a home with 3-10% down. You then qualify for tax benefits and can write your mortgage interest off during tax season. Your calculated mortgage payment is a fixed payment for the term of your loan, but you also have the opportunity to refinance. This means if the market changes and interest rates have gone down since you last financed your home, you may be able to qualify for a new loan with a lower payment.
One of the greatest benefits of buying a home is equity. Equity is the current market value of your home, minus what you owe. Investing in buying a home provides you with the ability to make a profit off your home in the future. This occurs through appreciation. With Oahu’s 3-5% year over year appreciation rate, your chances of earning a profit from your home are high. Another great option when you choose to move from your home is to keep it and rent it out. This can be a great investment and earn you extra income.
In regards to the military members, many are not aware of the wonderful home buying opportunities offered to them for their service. The Veterans Home Loan (VA) offered to military members can allow you to purchase a home with 0% down. Along with this incredible opportunity, you can pay for your home’s mortgage using your tax-free basic allowance of housing (BAH). This means that instead of using your BAH to pay rent to someone else, you could be using it to invest in yourself. Also, with Oahu‘s 3-5% year over year appreciation rate, military members often make a profit from their home in the time that they complete their permanent change of station (PCS).
Meeting with a mortgage lender to see what home loan you can qualify for is no cost for you. Today’s home loan rates are remaining excitingly low at 2.5-3.5%. With the world events changing daily, the rate of loans may increase back up to an undesirable rate at any given time in the near future. Although rates are low, homes are currently in high demand and short supply. Here are some quick tips when trying to buy in a competitive market: First and foremost, you must be pre-approved. Identify your desired neighborhoods and homes you want. Then determine a budget and stick to it. Know that to have your offer considered, you will need to go in with a competing offer. Prepare for the possibility of a bidding war. Most importantly, have a great realtor by your side to help guide you through the process. Connect with me to talk more about your buying concerns and what to expect in the current market.