Home Facts

Choosing Your Home

Choosing your home is one of the most important decisions you will make. If you do not have all the facts and information, you could make a decision that could ruin you financially.

Owning and caring for a house is not part of the “American Dream” for everyone – at least, possibly not right now. Based on lifestyle needs, renting can make more sense. When you choose the home that best suits your situation, consider how the following factors fit your lifestyle and your future. For more information, go to homequiz.net to take an 18-question quiz and find out if you are ready for home ownership!

Finances: What can I afford?

Historically low interest rates and extremely low-down payment mortgages have welcomed record numbers of first-time homebuyers into the market. Unlike previous generations who had to scrimp and save for a 10% down payment, today a house can be purchased with as little as 3% down. Some programs are available at zero down, so that more people can afford to buy houses.

In addition to a reduced down payment, many programs have lowered the acceptable credit scores and raised the debt/income ratios from the standard banking guideline of 25% of monthly income that is comfortable for most people. Ads for these programs appeal specifically to those who may not qualify for a traditional mortgage.

Before signing any papers, make sure you understand the long-term conditions. Some mortgages offer enticing initial interest rates or “buy-downs” that charge a low rate in the first year. Problems occur when the rate climbs in the second year and again in the third year when the rate finally is locked in for the duration. For example, the mortgage payment would increase $200 a month by the third year of a $162,000 mortgage that started at 4.125 percent and rose to 6.125 percent. Few first-time homebuyers understand the impact of the buy-down program.

If the special deals and programs have made it possible for everyone to afford a house, why is Indiana’s mortgage foreclosure rate double the national average?*

Renting keeps your short and long-term financial planning more flexible. Instead of investing your cash into the costs to buy and maintain a house, you could rent and diversify your investments with options such as an IRA, stocks or bonds.

Mobility: How long do I plan to live in this area?

We are a mobile society with more than half of us moving within any five-year period. In the first five years of homeownership, nearly 90 percent of your monthly mortgage payment goes directly to interest so your equity is limited. The costs you encounter selling a house might eat up any profit you would have gained in appreciation.

Living in an apartment offers the ability to move easily and with smaller financial penalties than selling a home. As a renter, you enjoy the freedom to move, to accept that better job in another state or just across town. If you might move within a few years, renting may be the best option for you.

Maintenance: How much time and money am I willing to spend on caring for my home?

Homeowners must commit money and free time to home improvements or repairs, and to other chores such as mowing, raking leaves, or shoveling snow. At least one percent of the house purchase price should be set aside for maintenance and repairs each year.

As a renter, you do not have the responsibility of maintaining your home and the facilities surrounding it. You are free to spend time with friends and family, or pursuing your favorite activities.

Flexibility: What if my family/relationship/employment situation changes?

A house purchase cements the size of your living space and the location. Adjustment to any change in personal needs would take time and considerable money.

With apartment living you enjoy the ability to increase or decrease your living space to fit your needs as they change. Many apartments are ready to move into with short notice.

With the climbing national unemployment rate and state of the economy, the average length of employment is much higher than it was five or ten years ago. By renting you have more flexibility to move to find the perfect job.

Recreation: Have I considered the benefits and amenities?

As a homeowner, you would be responsible for the cost and maintenance of a swimming pool, tanning bed, fitness equipment, playground, garage, or even business center equipment. Many apartments offer amenities that improve your quality of life and save unnecessary membership or usage fees elsewhere.

Take Your Pick: Will I find a home that I like?

Apartment homes come in a variety of sizes and configurations. The look and feel varies as much as residents do. Some apartments look like single-family homes. Others are in high-rise buildings. You have the choice of vaulted ceilings, attached garages, private alarm systems, or fireplaces. You can find apartments almost anywhere. You can live close to a specific school, grocery store, or your job. It’s your choice.