>>> THIS MORNING, WE WANT TO
TALK ABOUT ONE OF THE BIGGEST
FINANCIAL DECISIONS THERE IS,
WHEN IS THE RIGHT TIME TO BUY A
HOME AND WHEN DOES IT MAKE SENSE
TO RENT?
STEPHANIE RUHLE IS HERE TO HELP
US.
>> YOU KNOW FOR ME, AS SOON AS I
LOOKED AT A HOUSE AND I KNEW I
WAS GOING TO BE YOUR NEIGHBOR, I
WAS ALL IN.
>> SO HOW DO YOU FIGURE OUT
WHETHER IT MAKES SENSE TO RENT
OR BUY.
>> FIRST WE HAVE TO LOOK AT
WHAT’S GOING ON IN THE HOUSING
MARKET.
INTEREST PRICES ARE HIGH,
MEANING IT IS MORE EXPENSIVE TO
BUY A HOUSE.
YOU HAVE TO MAKE ABOUT $127,000
TO REALLY GET IN TO BUY YOUR
AVERAGE HOME.
THAT’S A LOT OF MONEY.
THAT’S WHY WE’RE SEEING LESS AND
LESS PEOPLE BUY.
FIRST-TIME HOME BUYERS SAW A
MILLION LESS THAN WHAT WE
NORMALLY SEE.
WHAT DOES THAT MEAN?
MORE PEOPLE RENTING.
IT MEANS RENTS ARE HIGHER.
RIGHT NOW WHO IS THE MARKET
GREAT FOR?
LANDLORDS.
>> IS THERE A FORMULA THAT
PEOPLE SHOULD BE USING OR CAN
USE TO DECIDE WHETHER TO RENT OR
BUY?
>> THE FIRST THING YOU WANT TO
LOOK AT WHEN YOU ENTER AN AREA,
YOU MOVE INTO A NEW CITY, THINK
ABOUT RENTING FIRST.
WHERE IN THAT CITY OR WHERE IN
THAT TOWN DO YOU WANT TO BE?
WHAT’S YOUR TIME HORIZON.
IF YOU THINK YOU ARE GOING TO BE
THERE FOR A YEAR OR TWO YEARS,
YOU WANT TO RENT.
BUT IF YOU ARE GOING TO BE THERE
OVER TWO YEARS, MORE LIKE FIVE
YEARS, THEN YOU ARE NOT GOING TO
PAY THAT EXTRA TAX IF YOU WANT
TO SELL AND MAKE A PROFIT.
IF YOU MAKE A PROFIT ON SELLING
YOUR HOUSE, YOU DON’T HAVE TO
PAY FOR THE PROFIT ON THAT.
REMEMBER, IF YOU ARE GOING TO BE
THERE, AL, WHAT DOES IT COST TO
BE THERE?
YOU WERE TALKING ABOUT THE HEAT.
WHAT IF YOUR AIR-CONDITIONING
GOES OUT?
DO YOU WANT THE LANDLORD PAYING
IT OR DO YOU WANT YOU TO?
IN GENERAL, RENTING IS LESS
EXPENSIVE, BUT YOU ARE NOT
BUYING THE WEALTH THAT COMES
WITH BUYING A HOME.
>> WHETHER YOU ARE A RENTER OR A
BUYER, WHAT CAN YOU DO TO BUILD
THAT WEALTH?
>> OKAY.
PEOPLE ALWAYS SAY, YOU KNOW,
RENTING, YOU’RE FLUSHING MONEY
DOWN THE TOILET IF YOU ARE
RENTING.
YOU ARE NEVER GOING TO BUILD.
THAT’S NOT ENTIRELY TRUE.
IF YOU LOOK AT YOUR MONTHLY
COST, IF WHAT IT COSTS TO RENT
IS LESS THAN WHAT YOUR MORTGAGE
PAYMENT WOULD BE, DON’T GO
SPENDING THAT MONEY, SAVE IT.
YOU CAN INVEST THAT MONEY IN THE
STOCK MARKET AND PUT THAT ALL
DIFFERENT PLACES AND IT IS
FLEXIBLE.
YES, YOU ARE BUILDING WEALTH
OVER TIME.
BUT IF YOU ARE IN A CASH CRUNCH,
YOU CAN’T SELL THAT HOUSE
OVERNIGHT.
THE ONE THING TO REMEMBER IF YOU
OWN, THERE ARE MAX BREAKS FROM
HOMEOWNER SHIPS.
SO OVER TIME, IF YOU ARE SLOW
OWNING THAT HOME, IT IS A BIG
WEALTH BUILDER.
DON’T THINK THAT RENTING IS
FLUSHING MONEY DOWN THE TOILET.
YOU JUST CAN’T BE SPENDING,
SPENDING, SPENDING.
>> WHAT IS THE LAST THING YOU
WANT PEOPLE TO KNOW?
>> THIS IS REALLY IMPORTANT.
ALL OF US LOVE TO LOOK AT HOUSES
AND APARTMENTS ON THE INTERNET.
YOUR MONTHLY MORTGAGE PAYMENT
WOULD BE LESS THAN 28%, OKAY, OF
WHAT YOUR TAXABLE INCOME IS
NEVER MORE THAN 36% OF YOUR
TOTAL DEBT.
YOU NEED TO MAKE SURE YOU ARE
SAVING MONEY FOR CLOSING COSTS.
IF YOU OWN A HOME, YOU KNOW.
IF YOU ARE BUYING A HOUSE, THERE
ARE HUGE CLOSING COSTS.
THERE ARE HUGE MOVING COSTS.
THAT COSTS A LOT OF MONEY, AND
YOU MUST CHECK YOUR CREDIT SCORE
BECAUSE THE KIND OF MORTGAGE YOU
ARE GOING TO GET MATTERS.
THE RATE YOU ARE GOING TO GET
MATTERS.
IF YOU ARE GOING TO SELL A HOME,
YOU NEED TO GET YOUR TIMING
RIGHT.
IF YOU SELL YOUR HOUSE RIGHT
AWAY, THERE ARE SO MANY HIDDEN
COSTS IN THERE.
LIVING, MOVING, IT IS EXPENSIVE.
>> YEAH, IT IS.
>> THERE YOU GO.