If you’re tired of paying rent, and dream of having a backyard of your own, you might have started thinking about homeownership. While renting prepares you for some aspects of homeownership, owning a house is a huge responsibility. Are you ready to stop renting and start owning?

Before plunging headfirst into the housing market, evaluate your point in life and your stability. It’s unwise to buy a home if your financial situation is unstable, as it’s not an easy asset to unload. If you plan to move in the next few years, it could be a poor investment. And you will need the time in your schedule, and energy, to handle all the snow shoveling, yard work, and repairs and maintenance that is currently your landlord’s responsibility.

There are times in your life when renting is the best decision for you to make. The local housing market can also make home ownership extremely expensive, even if you’re otherwise ready to own a home. You might not have the money for a down payment, or a down payment plus closing costs plus expenses of home ownership.

Talking through all of these things with a real estate agent to help you gauge readiness for home ownership. And think about this information when making your decision.

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Housing Market Outlook in Northern Virginia

Northern Virginia’s housing market has been hot these past few years as the area has low unemployment, strong jobs, and higher median incomes. These strong economic fundamentals, combined with low housing inventory, has driven up home prices.

Northern Virginia is where much of Virginia’s wealth is concentrated, and median home values are a reflection of a highly-educated and wealthy populace.

Go here to read more about the housing market outlook for Virginia.

Average Rents vs. Average Home Values

When you pay a landlord thousands of dollars of rent all you get in return is a roof over your head. When you pay a lender thousands of dollars in mortgage payments you’re building equity in an asset you could one day own outright. Potential future price appreciation builds your family’s wealth.

The average median price of houses in Virginia is $258,400, and values rose 3.8% last year. The market in Northern Virginia is quite hot, as low inventory and high demand have led to over 30% price appreciation since the year 2000. This presents a dilemma to home buyers. Wait until the market cools and hope to buy a cheaper home? Or jump in now, before the prices go up even further?

The median household income in Fairfax County is $118,279, and wage growth of over 2% has been keeping pace with housing price increases. This, combined with low unemployment of 2.9% and stable job growth means that these home prices are unlikely to go lower in the near future.

Average rents, however, are on the high end at $1,826. They vary by neighborhood, never dipping below $1,700 and getting as high as $2,200. This is only slightly less than the 20% a month that financial advisors tell clients is the most they should spend on housing costs. If you can put down 20% on a house at the median home value, your mortgage payment could be less than rent.

Average Utilities and Repairs vs. Renting

A mortgage, however, isn’t the only expense to owning a home. Monthly utility bills for heat, gas, electric, water and sewer will all add up. If utilities were always included in your rent you may have no idea what to budget for this. And expect to be shocked when you receive your first electric bill after running the A/C all summer.

The average cost of utilities in Northern Virginia is $140 a month, but things like the square footage of your home and type of heating system you have can greatly impact this number.

While you can use this to get a rough estimate of your monthly utility costs based on the square footage of the homes you’re looking at, you can also request that the current owner give you information. Your realtor can also ask them to provide information on the last few year’s utility bills and average costs.

If something breaks when you’re renting, you call the landlord. If you own the house, you have to find a reputable handyman, plumber, or electrician and pay their bill yourself. Aside from emergencies, you must maintain your homes’ systems such as heating and plumbing to prevent them from breaking down in the future and keep them functioning efficiently. Generally speaking, it’s a good idea to save 1% of your new home’s value for annual repairs.

When making your home ownership budget don’t forget to include these additional expenses. Even if a mortgage versus rent saves you money, once you add these in the financial picture could look quite different.

Financing Options for Buying a Home

How you finance your new home, whether it’s a ten or thirty-year mortgage or the interest rate you pay, impacts your monthly payment. If you have a lower credit score, you will be charged a higher interest rate. The lender could ask you to pay points up front, or prepaid interest, to also lower their risk.

High housing costs can make it difficult for first-time home buyers, so the state and federal government offers assistance. There are many programs available to help first-time home buyers in Virginia, and they offer help with both down payments and closing costs.

If you don’t have several thousand dollars for closing costs they can sometimes be rolled into your mortgage, but this will increase your monthly payment. Your realtor and mortgage broker can provide a lot of insight on how different lending choices will impact your ability to buy a home and what’s affordable. While it’s advisable for many other reasons, getting pre-approved for a mortgage also helps you establish your home buying budget.

Property Taxes and Home Ownership

Property taxes in Northern Virginia have a low overall effective rate of 0.98% but high home values mean that yearly property taxes are still an average of $2,453. Ask your realtor if they are aware of any upcoming special levies or referendums which could cause your taxes to rise higher before deciding to buy.

Current property taxes are a matter of public record, and can be looked up on the county assessor’s website. Most mortgage lenders require that you place either a half year or a full year of property taxes in escrow at the time of closing. Read the in-depth guide to buying a house in Virginia to learn more about these and other requirements during the home buying process.

If you’re waffling over whether or not you should buy a house in Northern Virginia now or wait, talk to an experienced, local real estate agent. At a free, no-obligation consultation, they can go over your situation and analyze your home buying readiness. Contact Clever to speak with a representative today.