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Rent or Buy?
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Rent or Buy?

Before purchasing a home, there are many factors you need to consider. There are benefits to both renting and buying, but considering the facts will help you determine the best choice for you.

Many families or young couples want to have their own property and home. But it’s OK if the time to purchase isn’t right now. That’s why budgeting and saving is so important for you to reach your goals.

It’s OK if you’re not ready for the commitment of purchasing a home. If that’s the case, focus on increasing your savings and building credit. Consider putting your savings into a short term “can’t touch” option, such as a CD or Money Market Account. These will give you a higher interest rate than a normal savings account, but will still be accessible with a few limitations.

To build your credit, start paying for larger purchases on a credit card and immediately paying them off. Or, take out a small personal loan and make all the monthly payments on time.

If you think you’re ready to buy a home, there are a few things you should do first:

1. Analyze your budget and calculate how much you’ll need.

The American Bankers Association gives a good starting guideline for deciding your initial price range. Of course, your credit history and current income will play a major factor in the loan you’re able to acquire.

Gross Income* x 2.5 = Low Range of House Cost

Gross Income x 3 = High Range of House Cost

*Your gross income is what you make before taxes or any deductions.

2. Consider the extra costs of purchasing and owning a home.

There is much more than just the asking price for a home to take into consideration as you analyze your budget.

Down Payment: Most loans require 10–20% down on a home.

Closing Costs: Sometimes this is paid for by the lender or by the seller as part of your deal.

Moving Costs: Don’t forget the cost of moving, especially if you plan on hiring movers or renting a trailer.

Future Maintenance and Up-Keep: A home comes with extra responsibility. Can you afford a lawn mower? What if the stove goes out the first month after you move in?

3. Find the Right Lender

Do shop around for a lender, but don’t let each of them check your credit score. Every time your credit is checked, your credit score could suffer.

Talk with each lender and see if you think you can work with them over the next few months. Pick a lender you feel confident will help you choose the right type of loan for your family.

Visit any of your First Kentucky Bank branches to meet with a loan officer. They can work with you to get pre-qualified before you begin looking at homes. If you’ve already found a home you’re considering, start the pre-approval process for a loan.

Remember this decision is not one to take lightly. Take your time building your savings so you can purchase your home instead of stressing out about the future.

If this is the time to rent, that’s great! You’re stimulating your local economy while enjoying a lower stress housing option. If it’s time to buy, enjoy finding the home that fits your family’s lifestyle and needs!

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