Suze Orman TwitterSuze Orman FacebookSuze Orman YouTubeSuze Orman LinkedIn
View Blog & News List

4 Signs You Should Rent Not Buy

April 23, 2015 at 12:00 PM

I am a big believer in home ownership, but only if it makes financial sense. If you answer yes to any of these questions you are better off renting:

Is there any chance you would want to move within five or so years? It costs a lot of money to sell a home, starting with the typical 6% commission you will owe your real estate agent. Then there are moving costs and transfer fees in some areas. Add it all up and I think it’s smart to expect you will use around 10% of the sale price just to cover all your sales-related expenses. The sooner you sell the less likely you will have built up enough equity to cover those costs.

Is your credit score below 740? A FICO credit score of at least 740 is going to put you in the position to land the best loan deal. Anything below that and I would recommend taking the time to get your score higher before you shop for a house. Qualifying for a mortgage that is just an eighth or a quarter point lower because of a solid credit score can save you tens of thousands of dollars in interest costs over the life of a loan.

Do you have less than eight months of living expenses set aside in an emergency fund? I know that’s a high bar. For a reason: your peace of mind. Until you have this safety cushion in place I don’t want you taking on any big financial obligations. And it gets no bigger than a mortgage.

Will you be making a down payment of less than 20%? Yes, I am well aware lenders will be happy to give you a mortgage with a down payment of as little as 3% or so. Don’t fall for it. When you make a low down payment you often will be hit with a higher interest rate. And any mortgage (other than a VA-backed loan) that is for more than 80% of the purchase price will require that you have private mortgage insurance. The bottom line is that low down payment mortgages end up costing you a lot. And most important, I think saving up for a down payment is an important step: it requires patience and resolve. And the ability to save! That’s just the sort of person who gets my approval to buy a home.

Tag Cloud

healthy aging take actionwould you decline a bonusAdequate Auto and Home InsuranceMoney Marketlife insurancefederal student loan deferment Wall Streetpublic service loan forgiveness programholiday spendinglowest cost fund optioncollege studentLTCi ASAPWarner Bros Television GroupAmy Lacyethousing marketCNBCteach importance of helping otherscommunity bankstaycationcreate new truthSuze Orman spouse Kathy Travishealthy retirement weightmortgage disclosurecompare monthly expensesAARP Social security calculatorFinancial EducatorsidelinedCOLAretirement accountsrequire chore in exchange for allowancelow-cost index mutual fundcalculate dependents annual income needsultimate compounding gift2015 financial roadmaplong-term care premiumscostly insurance mistake!00% tuition paidsmall changes is it true? no life insurance financially irresponsibleidentity theftMinor Children pay more than minimumcomparison shoppingFederal Stafford loanGiftNewtownheartachemarriage inequalityhome loan credit score below 740 gift grandchild IRA contributionSwap Older Annuities or Life Insurance paid in fullEmergency SavingsSchool of Social Workprescription tierhealthy gumsadult childrenEasy Life Insurance required disclosuredental discount plan2015 record year car salesAmericans don't use all paid vacation timesocial securityincrease emergency savingsincreased auto insurance premiumdangerous money season20% equitystretch out haircut appointmentsTelepicturesUniversity of Floridabuy down Financial Power of Attorney3 step financial road mapautomatic paymentco-sign pay 100% cashescrow740 credit scoresecure creditloan no longer than 36monthsStudent Debtmaintain standard of livingcost of capitalization calculatorget over life insurance phobiaWillnear historic lowsCiti Simplicity Card fraudulent returnInterestETF'sverify retirement plan with HR or plan sponsorHow To Build Credithome buying seasonwomen live longerFederal Funds Rateautomate student loan paymentsage appropriate goalssave don't spend face your financial fearrefinanceRoth 401(k)itemized deductionSuze changed my lifeanticipated salaryPrime Rate Increasecouple financesthree year car loanretain separate credit cardsbudgetallowance taskat worst still pay 75% benefit30 year mortgage 2016 adjust estimated taxpermanent life insurancesuccessFRAno interestphysical healthlive below your meansFinancial Systemkid borrow firstpercentage of women widowed 75-84RichSelfishtaxesapproved medical 100% tax-freedo you need life insuranceFederal Reservedeath benefit 20 to 25 times annual incomeSandy Hook Elementary SchoolCommunication Skills no fee transferfinancial aidtax ID theftcommitsetup automatic savings withdrawGoodbyeCollege of Veterinary Medicinebalance transfer life insurance name trust as beneficiaryhome related tax break bonus student loan repaymentswitch to spouse coverageplanhealthy youallowancegrandparent IRA contribution term insuranceHigh Credit Scoremoney vowsbe good exampleraise deductiblesHDHP let them have 50% controlWashingtonrefund3 savings buckets 3% debt transferred car buying mistakeshealthy teeth4 Must Have Documents reduce monthly paymentdo not pay allowance for good behavior6 month waiting periodbuying car 2016Holidayfinancial fearsdon't use allowance as bribeFinancial Awarenesslower interest ratespeak new goalInflation BenefitStock Investmentssocial workMarlo Thomasteens and moneyfile taxes quicklypremiumNew York Lifeadvice for college graduatesnegotiate points with bank or sellerpercentage men widowed 75-84long term goalstandard deduction open enrollment review higher insurance deductiblereferrals bill paying prioritiessavingsconfident of solutionsummer job match income positivealternative FICO scoreno private loanhigh deductible health care planborrowing plan HDHP's are not bad20 year level term secured cardlow credit scoredon't cover cosmetic dentistrybest loan deal get credit cardSuze Orman's Money Warschildren's bookcredit reportbest interest of investorschedule vacationterm life insuranceidentity fraudwaive home inspection bidstudentrepay student loansFinancialiffy incomeis it necessarySpendingPrime Rate Rise 2015don't blow tax refundARMgraduationLegal Guardianinsurance mistakenot gender specific get the most out of social security lower ratehigh down paymentpresident Obamawomen outlive menconsider roth 401(k)FHA loan feesEric Dodge women long term caredon't charge a pennydear suzeRevocable Living TrustAARPgay marriage ban end Florida raising mortgage rates responsibleback door Roth IRAmax benefit coveredget health insurancemental healthalways use all paid time offreduce interest ratedon't extend mortgage Gay Couplesclosing costs 2% of loansuitabledebtshort term goal no splurge loan necessitypush yourself to save more for retirementstandard raterent vs buyworkaholicAccuQuote.comonly refinance if it paysdon't defer interest paymentscar leasingpay down car loanhome buying mistakesMortgage Credit Availability Indexcnbc alarm clockpoint cost offset by savingsdeath benefit needs for familyunsubsidized Stafford loancompare provider pricinghigher monthly paymentschool Money-Savinglower premium15 year mortgagejuggle multiple financial goalszero rate transfer dealsChanging Livescollege graduate10 year repayment plan enjoy saving high premiumsmanage student loansbecome member initial tax break savings pleasurelower overall drug costhigh credit score discountdental insurance monthly dental insurance premium2017 Taxesstudent loan repayment estimatorAshley Springeremotional stakesgift up to 14,000one annual feePay Off Debt Before Retirementclosing feesFunds401Khome insuranceInfluential Celebritycredit unionprofessional advisorlow down paymentfinancial concernForeclosurelower mortgage interestdon't derail retirement savingscharges on credit cardshorter payback perioddream schoolknow before you oweaccelerate dental workresponsible with moneyUrbana-ChampaignBaby Boomersmobile appeight month living expense Financial Awareness Video FestivalLong Term Care premiumsengaged in financesAuto Savings Exhibitionreal estate mistakesincrease retirement savingsBill and Pennyhigh FICO scoreovercome financial fearsSelectQuote.compay off debtcommissionsstrained relationshipHDHP'sorigination feeschildren under 18women longer life spanprotect dependent multiple lendersSatisfyingpublic service career student loan repayment wives should be involved in retirementprotect loved ones confidentspecial saving accountfinancing car grandchild summer job IRA contributionCredit Card Rate Increasemoney-aware childshop online guaranteed level term policylearn good financial choicespowerfulprotect your familyoverspend on nights outpay high rate off firstEmployer Matched ContributionGraceARM Cautionreal estate marketburn outSuze Orman Scholarship20% down paymentoverspend on giftsSuze approvedbe kind to yourselfpreexisting condition not covered19 years cash flow problemdebt freebetter loan dealsdangerous retirement planFederal PLUS loanunexpected expensefinancial goal phraseFICO at least 720bad retirement planningunder 18 financial giftFinancial Advicewrite new goalleave a legacyspring summer cut monthly cellular billFinancial Solutions For Youfull retirement ageis it necessary?dental savings planpay down student loan debtfocus on needstitle insurancemeet monthly student loan debtis it kind?earn more on savingsreduce withholdingbuy homeswitch to roth 401(k)value moneyOverspendinglousy investmentmake saving a pleasureMost Influential Celebrities Listpay interest while in schoolcontribution monthly benefit not enough life insuranceloved ones dependent on incomesave moneypaying for collegeone credit cardsocial security not going brokeno apologyLong Term Care Insurance home budget after tax costOne Wallet At A TimeSave Us Moneyannual cost of living adjustmentcredit utilization rateCredit scorebuy home you can affordritual schedulederailed planinterest on student loanscredit managementHDHP's are good for youfiduciarynew carborrow each year, capitalization is going to pile up FICO credit score credit card mortgagestudent loan repayment plankids schedule paymentsbe true to yourselfFinancial Gift Clifffinancial argumentsraising interest ratesemployer offered life insurancelong-term care Revocable TrustFinancial CliffStaffords this year have a fixed 6.8% interest rate20 to 25 times annual incomeprotect and provide for minor child Holiday SeasonVeterinary Schoolproperty taxcredit cardbetter loan ratesFiscal Responsibilitycan you afford itaffordable premiummortgage brokerverify wellness screening and programs20% down payment avoid feesdon't ignore open enrollmentLTCraise your deductibleloan is giftadd teenCommencementhome ownershipUniversity of Illinoiscar loan2016 adjust withholdingMotherHeartvalentines dayfour steps to retirement savings insuranceSuze OrmanPhyllis Shelton expert long-term careretirementmortgage interest tax deductionmax employee match401(k) Contributionsteach your child good money habitsSuze is my biggest mentorUS Tax Code15-year refinance deallong term careretirement planworst financial mistakeincrease retirement contribution rate50 over 50employer funding HSAbest interest ratesdepreciating asset Cory BookerNew american Dream tax refund fraudmarriage financial responsibilityyours, mine & oursBeautyStudent LoanBankruptcyLTC shoppingGiftsaffordabilityBankcontribute household expenses Loveage appropriate choreMoneyMass Mutualdebit cardclosing disclosureConventional loan PMIrolloveremergency fund savingsInvest for savings growthemergency fund highest possible benefitCivil Rightsno private loansoverspend on dining outStudent Debt Crisisraise insurance deductiblebuying a carTeach3 bucket approachroth irapaid vacationbetter termshome buying budgettelevision hostPersonal FinanceSandy Hook PromisePBS Specialno waiting periodadjust allocations social security never insolventHDHP/HSAquick closingpay credit debt ASAPFixed Rate MortgageDurable Power of Attorney for Health Carefinancial independenceletter to suzecut monthly cable billearn allowancepurely financial standpoint40% toward financial goal8 RulesThe Suze Orman Showinsurance yearly reviewno late fee store credit cardsdon't do five year car loanfocus on new truth bad decisionsHigh FICO Score = Better RateLifestylerising home pricescostly legal Credit Card Interest RateInfluentialspeace of mindGay Rightsstay positivesame-sex marriageForbesfile asapdoctors in networkbreakdown projected monthly housing costloan big picture 10% donate to charityFinal Goodbyeavoid burn outJose Rodriguezmax employer matched 401(k) contributionuniversal college accessHSA tax savingsCD'shealthy retirement blood pressureFICO Scoreretirment savingsForbes Top 10doctor no longer in networktraditional vs roth 401(k)provider of financial supportLong Term Care shoppingonly offered while employed too expensive schoolexercise reguarlyno retirement funds for down paymentignore 6 month grace period Death BenefitYoung Adult Vital Documentsfamily save at least $100 monthlyback-to-school budgetno negativityMust Have Documents8 month safety netcommunity collegegift not loanautomatic withdraw to savings Retirement Incomemortgageteenssame sex marriage band end Floridano tax on withdrawlsAlarm Clockreplace permanent life insurance with termRetirement Savingsincentives for health care wellness screeningIRA contribution gifted moneynon conventional routeFree Debt EliminatorPost-Divorcekeep a schedulebig results january bills8 month emergency fundCPI-WCombo Insurance Productsinterest capitalizationlow mileage discountdon't buy wantseliminate credit card debtno sneaking in feesHoliday Shopping


View Blog & News List
People First. Then Money. Then Things.
Connect with me on Facebook Connect with me on YouTube Connect with me on Twitter
© 2017 Suze Orman Media Inc. All rights reserved.
 
 |  Search  |  Sitemap  |  Privacy  |  Terms
Sign Up For E-mail Offers
Open Panel
Close Panel