If your journey as a home buyer is just beginning, you probably have a lot of questions, many of them about finances. While you’re busy finding the perfect home and deciding what color you’ll paint the walls once you get the keys, we’re here to help answer your questions about the less fun stuff — like the ins and outs of down payments.

Since down payments are, in many ways, one of the final hurdles between you and owning that dream home, they’re an important step in the buyer journey. Here’s everything you need to know!

What is a down payment?

A down payment is a percentage of a home’s total purchase price. This payment is made by the buyer upfront when finalizing a real estate transaction. If you’ve ever bought a car, you’re likely familiar with the concept — but the bigger the purchase, the bigger the down payment.

Of course, down payments aren’t the only financial considerations you’ll have as a home buyer. Here are some related terms to keep in mind:

Earnest money vs. down payment

Although frequently confused, down payments and earnest money are two separate concepts.

Earnest money is a promise between buyer and seller and often ranges between one and 10% of the purchase price, according to Investopedia. When you provide earnest money, you’re signifying your intent to follow through on a real estate transaction. In return, the seller takes their house off the market.

There are certain situations in which you would get your earnest money back:

• The home doesn’t pass inspection.
• There’s a significant discrepancy between asking price and appraisal price.
• You fail to obtain a mortgage.
• The seller terminates the deal.

If the deal goes through and you officially become a home buyer, your earnest money goes toward the down payment.

Unlike earnest money, a down payment is an agreement between buyer and lender. It represents your agreement to make a regular monthly payment toward a home loan. It’s also calculated as a percentage of the purchase price, but its range is more variable, and there are more benefits associated with a higher down payment (more on that later).

Closing costs vs. down payment

Another related term is closing costs. Closing costs are usually paid only by the buyer and cover things that fall outside a home’s purchase price, including:

• Taxes.
• Loan origination fees.
• Appraisals.
• Title insurance.
• Credit report charges.
• Real estate agent fees.

Because closing costs serve a variety of home purchase purposes, they’re separate from your down payment. That means you’ll need to consider closing costs as an additional fee, while the down payment goes toward the total purchase price.

Monthly payment vs. down payment

It’s also important to note the difference between a monthly payment and a down payment. Most significantly, a down payment is one lump sum paid upfront, while a monthly payment is how you’ll regularly chip away at your mortgage — usually for 30 years. However, since a down payment reduces the total purchase price, paying more upfront means each monthly payment will be more manageable.

Down payment and interest rate

Since a down payment is a promise from buyer to lender, the amount matters. The “quality” of that promise — that is to say, the amount paid — is one factor a lender uses to determine your interest rate and, therefore, your monthly payment.

How much is an average down payment on a house?

Although you may expect the average down payment on a home to sit consistently at 20%, the National Association of Realtors (NAR) found that number to be closer to 12% in 2019. For first-time home buyers, the number was even lower at 6%.

Keep in mind that the average down payment is influenced by many factors, including:

• Total home price.
• Real estate market trends.
• Buyer finances.
• Interest rates.
• Availability of payment assistance.
• Mortgage insurance requirements.
• Calculated mortgage payment.
• Total amount in closing costs.

Therefore, while the average down payment may be 12%, that doesn’t mean you have to follow the crowd. Many people pay more than 12%, while others pay less. That’s why it’s important to know the “down payment rules,” which we’re about to explore.

What is the minimum down payment for a house?

The minimum down payment for a house acts as a solid benchmark. It can be used to make financial calculations and help you understand the total purchase price, acting as a stand-in until you decide exactly how much you want to pay.

However, that minimum number changes depending on what type of mortgage loan you’re pursuing. Each type has a different lender involved, which means there may be more or less flexibility. Here are a few minimum down payment options, according to U.S. Bank and The Mortgage Reports:

• 0% down payment: A USDA loan and a VA loan each require no down payment.

• 3 – 5% down payment: The 97% loan has a minimum down payment of 3%, while the FHA loan requires 3.5% and conventional fixed-rate loans require 5%. Availability of these loans depends on total mortgage amount and buyer credit score.

• 10% down payment: Adjustable-rate mortgages (ARM) and any jumbo loan will both have minimum down payments of 10%.

While the minimum down payment may look promising as a way to help you afford closing costs or put your savings toward the regular monthly payment, this may not be the best choice depending on your financial situation.

Benefits of a larger down payment

There are plenty of reasons to make a larger down payment, if possible. Here are just a few examples:

Avoid mortgage insurance

If a buyer decides on a down payment less than 20% of the purchase price, lenders may get nervous about the buyer’s ability to make their monthly mortgage payment. That’s why these smaller down payments are “triggers” for mortgage insurance. This adds to the overall price, as the insurance premium is included in your monthly mortgage payment.

The total cost of mortgage insurance depends on multiple factors, including:

• Credit score.
• Down payment amount.
• Type of mortgage.
• Type of loan program.
• Type and frequency of negative credit events.

Minimize the amount borrowed

A down payment is a percentage of your dream home’s purchase price. As such, the higher percentage you pay, the less you’ll have to borrow to make up the difference. A smaller loan can mean a lower monthly payment, a shorter loan term and even better overall credit, since 30% of your credit score is determined by how much credit you actually use, according to Business Insider.

In addition to credit score benefits, a smaller loan amount means smaller interest payments. By paying more upfront, you’ll be paying less overall.

Financial flexibility

According to The Balance, a higher down payment helps lean the debt-to-income ratio in your favor, which is how a mortgage lender compares a borrower’s monthly income to their monthly payment amount across all debts (auto loans, credit cards, etc.). If you apply for new credit cards or loans in the future, this better debt-to-income ratio will be a good sign for your lender and may lead to better results.

From this perspective, a higher down payment might take a chunk out of your savings right now, but it will help support large purchases in the future.

Better interest rates

Although the interest rate on a mortgage is determined by many elements, a larger down payment can do a world of good. According to The Balance, a larger down payment is a more solid, reliable promise, showing the lender you’re financially comfortable enough to pay off a long-term mortgage. Meanwhile, a smaller down payment may signal that you’re more of a risk.

Down payment assistance programs

According to the NAR, 58% of buyers source down payments from their personal savings, while 38% use money from selling a previous home. 11% said saving for a down payment was difficult, often because of these factors:

• Student loan payments.
• High rent.
• High mortgage rate.
• Credit card debt.

Luckily, home loans aren’t your only chance for payment assistance. In fact, there are certain loan options focused on helping you make your down payment. While many have requirements like a certain credit score, real estate buyer education programs and income caps, these requirements vary, which means you’re likely to find something that works for you. Most or all down payment assistance programs also require you to work with an approved lender and utilize a specific loan type, including a conventional loan, FHA loan or VA loan.

Keep in mind that down payment assistance is often targeted at first-time home buyers. However, if you haven’t owned a home in three years or more, you’re considered a first-timer — so be sure to take this into consideration when reading the fine-print.

Here are a few examples of payment assistance options based on information from The Mortgage Report and the FHA:

Grants

Grants are, essentially, a gift. They never have to be repaid — which is good news for your down payment and your dreams of owning real estate. Offerings vary by state and are generally based on total income or debt-to-income ratio.

Loans

A down payment loan is a second mortgage. The cost becomes part of your monthly payment and functions in much the same way as any other loan.

Deferred loans

Deferred loans may be familiar to any students out there. They’re second mortgages, but the payments are deferred and only need to be paid when you make a change like moving, selling the home or refinancing your mortgage.

Forgivable loans

Similar to deferred loans, forgivable loans don’t need to be paid monthly. Instead, they come with an “end date,” which means they’re forgiven as long as you don’t move, sell or refinance before that date. The length of a forgivable down payment assistance loan can vary between five and 15 years, depending on the individual buyer.

How down payments get you home

Down payments are just one part of the home buying process, albeit an important one. They’re not earnest money, closing costs or monthly payments, although they are closely related to all three. They are calculated as a percentage of a home’s purchase price and can vary widely, from 0% on VA or USDA loans to 20% and higher.

While the average down payment sits at 12%, higher payments have larger benefits, like a more manageable monthly payment or a better interest rate. You’ll also be paying less overall, because you won’t be borrowing as much and therefore won’t be paying as much interest.

However, if a high down payment isn’t currently within reach, don’t give up hope. There are plenty of down payment assistance options to help you finance your real estate purchase. As you research your down payment options, don’t forget the ultimate goal: finding a safe, comfortable house free of costly surprises. Remember, a down payment is just one step on the pathway to getting home.

Ready to officially become a home buyer? Search Bungalo® listings to find the property of your dreams, and don’t forget to reach out with questions about down payments, working with real estate agents, understanding a mortgage or home loan and more.

You’re officially ready to buy a home. Step one: Figure out what you’re actually looking for.

Whether you’re a first time home buyer or an experienced real estate pro, purchasing a house can get complicated. From combing through new listings to navigating the complexity of closing, it often feels like your move-in date is more of an “if” than “when” scenario.

Learn what to look for when buying a house to make the process a little easier — and how the team at Bungalo® can get you into your dream home even faster.

 

Navigating the housing market: What to prioritize

When you imagine your future home, what do you see? Is there a gorgeous kitchen, one-of-a-kind backyard patio and pristine landscaping? Or are your current qualifications simply four exterior walls and a functioning roof? If you fall into that second category, don’t stress.

There’s nothing wrong with going into your home buying search with an open mind. However, you shouldn’t ever feel like you’re settling for a house simply because it’s available. Instead, sit down and build a list that divides each home’s features into three categories:

• Must-haves: These are the features that you can’t imagine living without. If a property doesn’t have these, you won’t even consider it. For a growing family, this may mean extra bedrooms or a large, kid-friendly yard.

• Nice-to-haves: Think of these as your wants rather than your needs. You’ve always liked the idea of owning a pool, but you won’t pass up a home just because it doesn’t have one. If it does, that’s an added bonus.

• Don’t care: It may sound a little harsh, but this is an important category to consider. If a house has these features or attributes, great. If not, you can pass. For example, do you work from home? Then the distance between home and the main office isn’t really relevant.

By outlining some of your specific priorities, you can go into your home buying search with a clearer picture of what you want your future home to look like. Plus, you can save yourself the time and hassle of touring a home you’re uninterested in. At Bungalo, we try to make life a little easier by offering convenient, self-guided virtual tours that allow you to get more familiar with your options at your own pace.

Still not sure which features you actually want? That’s OK — you don’t know until you know. We’ll break down some of the most common characteristics homebuyers are often looking for.

Top in-home features

Let’s start with your home’s interior. Some overlooked features that buyers realize they want later on in their search include:

• Hardwood floors: Interested in hardwood flooring? According to the National Association of Home Builders (NAHB), you fall into the majority alongside 81% of prospective buyers. The natural look can be easier to maintain and more durable than carpeting.
  
  
• Central air: Depending on where you live, central air might need to be included on your must-have list. This is especially true if you live somewhere that gets a little warmer in the summer.
  
  
• Attached garage: Are you looking for a home that you can grow into? A garage can offer some serious storage space and keep clutter out of your main living area.

Some of the other must-have features that the NAHB identified include energy-efficient appliances, an updated patio space and a walk-in pantry. To determine which characteristics matter most to you, think about the spaces your family spends the most time in. For example, if your primary gathering place is your kitchen, you may want counters that accommodate plenty of bar stools or a spacious dining nook.

Move-in ready vs. Fixer-upper

We all spend plenty of time watching the pros on HGTV transform a run-down property into every buyer’s dream, but do you actually want to handle that process for yourself?

For some prospective homeowners, a fixer-upper can be a great way to snag a larger home at a more affordable price. Plus, you can customize the space freely and make it more your own. As you work to determine which options make the most sense for you and your family, keep the following questions in mind:

• Do you have the time and resources to put into a renovation project?
• Are you comfortable with smaller DIY projects such as painting the walls or cabinets?
• Will sticking with fully move-in-ready homes limit your local options too much?

All of our homes at Bungalo have been recently updated and are move-in ready, saving you the hassle of any repairs or DIY projects. However, if you’re looking to customize your home, you can do so with the confidence that there aren’t any unpleasant surprises or unplanned costs waiting for you around the corner.

 

Considerations for your neighborhood

Aside from your home itself, one of the most important factors to keep in mind is where the house is actually located.

Think about the following attributes as you look around the area your home is in:

• Location: Do you need to be in a certain district for your children’s school? If you’re working in the office, how far of a commute are you willing to make?
  
  
• Community: By walking or driving around your would-be neighborhood, you can get a better sense of the type of living experience the community offers.
  
  
• Homeowner association (HOA): Would you like to be in a neighborhood with an HOA in place or would you like to have more independence when it comes to your property?

Just remember: Your home should reflect you and your family’s day-to-day life. So, while many homebuyers are interested in the considerations we listed above, some of your own needs and expectations may vary. Sitting down and talking with everyone who will live in your home is a great way to make sure you’re looking at properties that will accommodate your entire family’s needs as best as possible.

Personal considerations for your house hunting search

Once you’ve started to get a clearer understanding of some of the features and characteristics you’re looking for in your next home, you can narrow down your hunt to be even more specific.  Some personal considerations that you should be sure to factor into your search include your long-term plans as well as individualized factors such as the price range you’re comfortable with:

Space requirements

Everyone has different needs when it comes to the size of their home. For some families, the bigger the better. For others, extra rooms just translate to more stuff to clean every week. Some important questions that will help you zero in on your specific space needs include:

• Do you have plans to grow your family in the near future?
  
  
• Are you looking to host multiple guests throughout the year and during the holidays?
  
  
• How much storage space do you currently have? Are you comfortable paring down your belongings for a smaller home?

As you work to determine how big of a house you’re interested in, one of the easiest ways to figure out your needs is to look at your current living space. Are you moving because you have too much or too little space? If so, you should be using the size of your house or apartment as a benchmark for the amount of square footage you’re looking for in your next home.

Creating your price range

There’s nothing worse than falling in love with a home only to realize it’s totally out of your budget. Avoid the headache — as well as the heartache — by setting your price range in the initial days of your home search.

Once you decide you’re interested in buying a home, start thinking about your budget and get pre-approved early on in your search:

• Understand what you qualify for: Depending on your background and circumstances, you may be eligible for a home loan with more competitive interest rates and lower monthly mortgage payment requirements.

• Shop around for your mortgage: Not all mortgage providers are created equal. Feel free to explore your options and find the right lender for your financial needs.

• Set a hard limit: We’re all willing to go the extra mile if that means closing on our dream home. If you have some room to play with, set a hard stop at the price you’re most comfortable going up to.

Working with your mortgage lender to get pre-approved can not only help you to narrow down your options and find a home within your budget, but it can also speed up the closing process on the other side of things.

 

Renting vs. Owning

If you’re not totally thrilled about your price range or the current state of the market, that’s more than OK. You may want to take a step back and decide whether renting or buying makes the most sense for you at the moment. As you consider which option works best for you and your family, keep the following considerations in mind:

• How long you plan to stay: If you’re looking for a space to call your own for five or more years, renting could be more hassle than it’s worth — plus, your monthly payment may actually be higher than a mortgage in the long run.

• Personal savings: Do you have enough cash for a 10 to 20% down payment on a 15-year fixed-rate mortgage? If not, renting can give you the time to build up your savings while still living in the area you plan to settle in.
  
  
• Credit report: One of the biggest hurdles for many prospective homeowners is building up their credit score to the point that lenders will take on their mortgage loan. If your score isn’t near or above 620 (or you’re experiencing difficulties getting approved), renting can give you extra time to build up your credit.

There’s no one right way to become a homeowner. For some, your journey may start with a traditional starter house. For others, it may come later in life in the form of your forever home. Don’t feel as though you need to rush the home buying process. Take the time to make sure you get everything you want out of your space — no matter how long you plan to stay there.

What to know if you’re looking at an older home

Do you know what one of the most costly mistakes prospective buyers make is?

Have your guess ready?

The answer: skipping over a home inspection. Although there isn’t a law that requires a home buyer or a seller to conduct an inspection when purchasing or selling a house, making the decision to omit it can lead to some unwanted surprises in the long run.

A home inspection is your last opportunity as a buyer to uncover any hidden problems with the house before making the purchase final. Over the course of several hours, a certified inspector will walk through your prospective home to identify problems small and large.

As the American Society of Home Inspectors (ASHI) explains, the standard home inspector’s report will include a detailed audit of the following features of your home:

• Heating and air condition systems.
• Plumbing and electrical setup.
• Roof, attic and visible insulation.
• Walls, ceilings, floors, windows and doors.
• Foundation, basement and other structural components.

In the days after their initial walkthrough, your home inspector will send a written report containing details on everything they found. This will include notes and photographs highlighting potential health hazards, structural damages and any issues so you can see exactly where the problem areas are.

Depending on the size and severity of the problem at hand, you can often use what’s been uncovered during the inspection as a bargaining tool to lower the final purchase price of your soon-to-be-home.

The average cost of a home inspection is about $300 to $500, according to the Department of Housing and Urban Development. This bill is almost always handled by the home buyer during the closing process. However, the exact amount you pay can vary depending on the size of your house, its square footage as well as where you’re located in the U.S.

At Bungalo, we do everything we can to make sure your home won’t come with any surprise closing costs. That way you can move in with the confidence that you’ve made the right decision. All of our homes receive top-to-bottom inspections before you move in, so you can spend less time worrying about that suspiciously leaky pipe and more time picking out the right furniture for your living room.

Become a homeowner in less time

Buying a house can feel like a never-ending process. That’s why we created Bungalo: to get prospective buyers like you into your future home as quickly as possible. With Bungalo, you can tour a property with the click of your mouse from anywhere, at any time. And, once you do find a home that has all your must-haves, all that’s left is to create your digital offer.

We believe you should feel confident in your homebuying journey. That’s why with Bungalo, there are no hidden repairs or unexpected outbids standing between you and your new home.

Check out our blog and learn more about homeownership.

This article is meant for informational purposes only and is not intended to be construed as financial, tax, legal, real estate, insurance, or investment advice. Bungalo always encourages you to reach out to an advisor regarding your own situation.

The housing market is like a long-running game: Sometimes buyers have the upper hand, and sometimes sellers are winning at every sale. So if you’re looking to buy a house in a market that favors sellers, are you out of luck, or is there something you can do to make sure you get a great home for your money?

The good news is that there’s a way to win this game even if you’re a buyer in a seller’s market. Brush up on these important considerations to be sure you end up with a good deal, high value and the home of your dreams.

Dealing with a seller’s market: Buy or wait?

If you’ve been researching real estate or looking for property in areas you’d love to call home, you’ve probably heard that the housing market is hot or that it’s a seller’s market. Here’s what you need to know about those terms and how to use them to your advantage when buying a home.

What is a seller’s market?

A seller’s market is a housing market that benefits sellers rather than buyers and often results in a cash offer, a bidding war and high competition all on a single property. This can happen in a variety of situations:

• Supply is low and demand is high

If you’re searching for a home in an area where not much building has taken place or most housing is already spoken for, the chances are high that you’ll have a strong seller’s market to contend with. When interested buyers are faced with low inventory, sellers have a commodity that everyone wants — a home — and they can list at a high asking price.

• An area suddenly becomes “the place to be”

If a city has low crime rates, a low cost of living, affordable mortgage rates, plentiful housing or a booming job market, it’s likely to become the next big thing. As people rush to make that city their home, the landscape will shift to every seller’s advantage, creating a seller’s market. This is especially true in areas that have just made any national “best place to live” list or are the new home of a big tech or entertainment company.

• A hot market just keeps getting hotter

Say the real estate market in a certain area started out hot and hasn’t reversed course — for example, if there’s no more room to build new homes. This is a case where a seller’s market just keeps getting more beneficial for anyone with real estate to list.

What are home price cycles?

Lucky for buyers, nothing lasts forever — including the state of the housing market. Home prices move in a four-phase cycle, and once you know where your market is in the cycle, you can start tracking where house prices will go next.

#1: Recovery

Although this is the easiest spot to jump in, remember that home prices move in a cycle, meaning there’s no real “starting place.” Instead, this circle just keeps on spinning.

In the recovery phase, the housing market is starting to improve. It’s a buyer’s market because past events have resulted in high supply and low demand. Sellers don’t have a rare commodity, so they can’t list at high asking prices, and buyers have plenty of options.

#2: Expansion

As buyers see more plentiful real estate opportunities, they become more eager to spend their hard-earned cash. They buy property, and, noticing the change, sellers start listing their homes. In this phase, buyers and sellers are on equal footing as supply and demand remain roughly equal.

#3: Hyper supply

Once the housing market booms, more players realize they want a piece of the action. Builders start creating new neighborhoods to meet demand — but soon, the market is flooded.

#4: Recession

In this phase, the average asking price drops, mortgage rates tend to go down and a buyer’s market returns — but even so, buyers aren’t particularly motivated. They just saw house prices plummet, so they’re a little hesitant to invest.

Should you wait for a buyer’s market?

Now that you know the difference between a buyer’s market and a seller’s market — and how they move through four phases — it’s time for the big question: Should you wait for a market that benefits you?

The answer to this question depends on a variety of factors, including:

• How quickly you need to move
• How long you intend to stay in your new home
• Whether you can afford to pay an inflated asking price
• Whether your current home also sits in a seller’s market

If you need to move quickly or you can sell your current home for a high price, a seller’s market might not be bad news for you.

How do housing markets differ by region?

Housing markets in different areas play by different “rules.” For example, in an area where apartments are the norm, a single-family home with plenty of space will probably always be listed for a high asking price. However, in areas where single-family houses are plentiful, apartments close to the hustle and bustle of city life may be more expensive.

To determine the housing market conditions in your current area (where you’ll be a seller and therefore benefit from a seller’s market) or target area (where you’ll be a home buyer and hope for a buyer’s market), consider the following:

• The state of the local economy
• The state of the national economy
• The number of houses available for sale
• The number of houses being built
• The number of interested home buyers
• How housing prices have fluctuated over time
• Regional home standards or expectations

While this may be a simpler task in familiar areas, it can be tricky when you’re trying to understand the culture and expectations in a new city. Research your target area so you can get to know the housing market like a local.

How do you find real estate bargains in any market?

Let’s say you’ve done all your research, you know exactly what kind of market you’re dealing with and it’s time to find that dream home. How can you know you’re getting a good deal, no matter what the housing market looks like?

Be mindful of your money

Before you fall in love with any property, it’s wise to sit down and figure out exactly how much house you can afford, from interest rates to maintenance fees.

According to Forbes, one of the biggest things mortgage lenders consider is your debt-to-income ratio. That’s exactly what it sounds like: a measurement of how much money is going out the door versus how much is coming in. Lenders want to know that you can make your mortgage payments comfortably — so pay attention to this ratio when deciding on a budget.

It’s also smart to plan on paying a decent down payment. A higher down payment means a lower loan amount — and, if you hand over 20% or more of the purchase price as a down payment, you may not have to pay for loan insurance.

Finally, keep in mind that some sellers — especially in a seller’s market — will expect earnest money. This is “putting your money where your mouth is” and proving you’re serious about being a home buyer. Earnest money goes toward the down payment and closing costs if the deal goes through, and usually returns to you if the deal fails.

Keep an eye on the home inspection

A home inspection for one house is usually affordable. However, in a competitive market, deals may fall through left and right, even after you’ve paid for an inspection — so keep an eye on this part of your budget. Inspecting lots of homes can get pretty pricey.

Know what you’re up against

It’s possible to get a good deal, even in the worst market — but you have to know the unique challenges you’ll be facing. For example, if there’s a lot of competition in your target market, brainstorm ways to make your offer stand out — like having a mortgage preapproval letter in hand or paying a little more than the asking price.

What are alternative real estate search methods?

When the market is hot and every home buyer is out hunting for that perfect property, you need to find creative ways to get ahead. Here are a few ways to find the best deals, even when there isn’t much real estate for sale.

Search like a pro

House-hunting can be fun if you do it the easy way. Using an all-in-one platform helps you keep your search criteria organized, simplifies the process, and gives you all the tools you need to succeed.

Tour on your time

Touring a home could just be the “once upon a time” in your story — so why do it on someone else’s schedule? With Bungalo, you can enjoy self-guided tours at your convenience, giving you the flexibility and freedom to explore to your heart’s content.

Look for guarantees

Nothing in life comes with a guarantee, right? Actually, we love guarantees here at Bungalo! Our certified listings have been rigorously checked for issues and are fully renovated, which means you won’t have to worry about any pricey surprises just around the corner. Plus, with our 90-Day Post Close Protection, anything that doesn’t live up to our certification standards is covered.*

Don’t play the price game

Plenty of real estate deals involve hidden fees and frustrating prices that feel like one big game, but that’s not the case when you shop with Bungalo. Here, what you see on the price-tag is what you get. It’s our transparent, no-hassle approach to pricing — and we’re pretty sure your budget will thank you for it.

Buy with Bungalo for the best value

Want to know the best-kept secret for succeeding in a seller’s market? All you have to do is think — and house-hunt — outside the box.

Instead of trying to beat other buyers to the punch or stressing about inflated prices, try browsing Bungalo’s listings. You’ll find houses to fit your budget and your dreams — all without having to worry about making a bad investment.

Start searching today and become the savvy home buyer you were born to be.

This article is meant for informational purposes only and is not intended to be construed as financial, tax, legal, real estate, insurance, or investment advice. Bungalo always encourages you to reach out to an advisor regarding your own situation.

*Some limitations apply. See full list of Covered Items.

If you’ve finally taken the leap and decided to buy a house, there’s one factor that will uniquely affect your process: location. If you’re looking to buy a house in Nashville, it’s critical that you do your research into the Nashville-specific housing market.

Depending on where you’re looking to buy, the home market and buying process will change. So read on to discover what tips and tricks we recommend at Bungalo® that will help you purchase your dream home in Nashville, Tennessee.

Exploring the Nashville housing market

Understanding the local housing market will help you determine the speed and process that you should adopt to meet your house hunting needs. For example, as the capital of Tennessee, Nashville is an incredibly popular location for home buying and renting. Filled with historical landmarks and diverse populations, the “Music City” housing market is in high demand.

In fact, WalletHub ranked Nashville as the 4th best real estate market in the U.S. based on growth in property value and the strength of the local economy. Meanwhile, U.S. News & World Report ranked Nashville as one of the best places to live in the U.S. due to its high desirability, value, job market and quality of life.

The facts show that people want to live in Nashville, which means that purchasing a home in this area will be competitive — especially if you have your sights set on a specific location. You’ll have to approach new listings with everything you need in order and be able to make a decision quickly.

This can be both a challenge and a benefit: As more buyers enter the market, you’ll need to take steps to stand out from the competition and successfully purchase your dream home. On the other hand, since properties are quickly listed and sold, your buying process will most likely be efficient and quick, instead of dragging on for weeks at a time.

Yet, before you throw yourself into the home buying process in Nashville, it’s important to consider first whether you want to buy or rent and, second, where in Nashville you want to focus your search.

Renting vs. buying a home

When it comes to renting or buying, the right choice will be unique to each person looking for a home. There are plenty of advantages and disadvantages to each option, so let’s take a look at whether homeownership is best for you.

Buying a home

Purchasing a new home comes with a variety of benefits from greater privacy to being your own landlord. There are also the following financial advantages:

• Increased home value over time
• Predictable costs (if you have a fixed-rate mortgage)
• Tax deductions
• Improve your credit history

Typically, monthly rent payments are lower than comparable mortgage payments for most U.S. homeowners. However, WKRN reported that Nashville homeowners actually pay 7% less per month than renters.

This doesn’t mean that buying a home is necessarily the best option for you, though. Purchasing a home can also be a much bigger commitment than you’re ready for. Specifically, it ties you down to one place for at least a few years and ensures a long-term financial obligation to your mortgage.

As a home buyer, you have to be prepared for any and all financial costs, including down payment, closing and moving costs. Additionally, you take full responsibility for the maintenance and repair of your new home, which can create unforeseen financial costs.

Renting a home

The best benefit to renting is it’s less of a financial commitment. At least, in the short term.

Although Nashville’s average rent may not be cheaper than your average monthly payment as a homeowner, your rent sometimes covers utility costs, such as heat or hot water, which would otherwise make a bigger dent in your wallet. In this way, renting is a great option if you can’t afford the costs of homeownership.

Renting also makes it easier to relocate if you’re not completely sure about a specific area, building or home.

However, there are disadvantages:

• Rent will likely increase each year
• You don’t get tax deductions
• You have less control over your home
• No lasting investment in the property

Considering these factors, it’s best to go with the option that resonates most with your situation and your financial needs.

Where to buy a home in Nashville

Nashville is a large city, so it’s essential that you narrow down the areas that fit what you’re looking for. Ask yourself these questions:

• What areas are in my budget?
• Do I want to be in a quieter or more active part of the city (Greater Nashville suburbs vs. downtown)?
• Do I prefer a specific commute for work?

Based on your answers, you should be able to pinpoint which areas to focus on — or you can discuss with a local real estate agent to find out where they’d recommend.

How do you purchase your Nashville home?

Once you’ve set out on your home search and found that perfect listing, it’s time to start the process of purchasing your Nashville home.

Remember, the Nashville real estate market is very competitive, so it’s important that you come in prepared and with a predetermined budget before you start searching. For additional guides on purchasing your first home, check out our blog.

Our recommended tips include:

• Set a firm budget and save
• Get preapproval for a mortgage
• Use a local real estate agent — with verified Nashville references!
• Make a cash offer, if possible
• Don’t be afraid to walk away from the sale

These five steps will help you stand out from the crowd of other home buyers and ensure an efficient process.

Find your Nashville home on Bungalo

Bungalo is an all-in-one platform that guides new home buyers through every single step of the process, from search to closing. Besides offering you a transparent look into your local housing market, we also guarantee that every house on our platform is Bungalo Certified.

Our certification process ensures that every inch of your potential new home has been inspected and improved to meet professional standards. We also offer 90-day post-close protection, so that you can purchase your house with peace of mind.

If you’d like to see what’s currently listed in Nashville, take a look at what we have to offer. *This article is meant for informational purposes only and is not intended to be construed as financial, tax, legal, real estate, insurance, or investment advice. Bungalo always encourages you to reach out to an advisor regarding your own situation.

If the past year and a half has you itching for something new, let us introduce you to your next adventure: Tampa, Florida!

This well-known Sunshine State city has no shortage of entertainment for you to explore, from bustling nightlife to a rich arts and culture scene. But even if you’re familiar with Florida, packing your bags and permanently moving south can seem a bit nerve-wracking, especially when it comes to navigating a new housing market.

Let the pros at Bungalo® serve as your guide as we dig deep into how you can find your perfect future home in Tampa.

Exploring the Tampa housing market

If one thing’s for sure, it’s that we’re all looking for some extra Vitamin D after spending so much time indoors — and the current state of the housing market in Florida just goes to show how true that is.

Although the Tampa area has seen its fair share of ebbs and flows when it comes to fluctuating demand, there’s never been a more popular time to buy in Florida. The National Association of Realtors (NAR) reported a 10% increase in the median price of a home in the Tampa Bay area since the first quarter of 2020, coming in at about $225,000. While the group is still generating its findings for the second half of 2021, the general consensus is that the market has only continued to grow during this time, with demand rapidly rising.

The report from the NAR also found that the economy of Florida has outpaced the rest of the nation at an annual growth rate of 22.8% with employment rates continuing to increase as more Americans turn their summer vacations into a year-round reality.

While the booming Tampa real estate market can come off as daunting, the long-term affordability of properties in Florida continues to be lower than many other local markets across the U.S. The ratio of monthly mortgage payment to annual income is about 11% in Tampa Bay —  7 points lower than the national average.

Long story short, if you’re looking for your new home or your next property investment, now’s a great time to start browsing the listings in Tampa.

Benefits of buying a home in Tampa

Still not sure if Tampa is right for you? With different museums, shops and restaurants to explore around every corner, Tampa is truly the perfect place for young professionals, recent retirees and everyone in between.

Just some of the unique benefits of moving to this popular Central Florida city include:

• Consistent weather: No matter where you’re moving from, chances are your weather isn’t nearly as predictable as the sunny blue skies of Tampa. If you’re in the market for year-round sunshine, then we’d recommend you start packing your sunblock and swim trunks.

• Easy travel options: Want to be central to all that Florida has to offer? Look no further than — drum roll please — Central Florida. Whether it’s a quick trip to a nearby amusement park or plans for a beautiful beach day, you’ll find that nearly every attraction is just a short drive away. Plus, if your travel plans take you out of the state, the Tampa International Airport is also close by and easily accessible.
  
  
• Restaurants and new cuisine: Tired of ordering take-out from the same five places? We get that. In Tampa, there’s no shortage of new and delicious cuisine to try — the only challenge will be finding the time to taste them all! With fresh seafood and dishes inspired by the unique cultures that make Tampa the dynamic city it is, you’ll be sure to find your new favorite meal every other night.

If you’re ready to head down to Florida, there are just a few important things to keep in mind before you officially kick off the moving process.

What should you consider when purchasing a Tampa home?

Given the high demand versus the limited supply of homes in Tampa, it can feel difficult to find and close on the perfect home for you and your family. However, that shouldn’t turn you away from the Sunshine State. With a little bit of research, you’ll be well on your way to closing on your future home.

With that in mind, let’s go over some of the most common questions both new and experienced homeowners may have:

What should I do before I start the process of buying a new home?

Before you begin, put together a list of your must-have features, your nice-to-haves and any potential deal-breakers. Going into your search with a clear vision in mind will save you the inconvenience of touring a home you’re not interested in, and it’ll give your real estate agent a clearer understanding of what you do like.

In addition to creating your budget — more on that in just a second — you’ll also want to consider any outstanding loans as well as the mortgage on your current home. Creating and following a strategic repayment plan will ensure that you have the sustainable cash flow you need to buy the home of your dreams.

How long does it take to buy a home?

In a competitive housing market like Tampa, it may be a while before you’re able to close on your new home. Generally, you’ll want to start prepping for your search up to 12 months from the time you’d like to move in, with tours and walkthroughs starting six months out. After submitting an offer, you may still find yourself anywhere from one to two months out from your actual move-in day, depending on how long inspection and appraisal take.

At Bungalo, we help speed up this process with our transparent “No-Hassle” pricing structure. When you make an offer on your dream home, you can rest assured that you won’t be outbid by a higher offer or an all-cash buyer.

What should my budget look like?

As we mentioned earlier, the median price for a single-family home in Florida right now is about $225,000. However, depending on the specific features you’re looking for, you may need to plan to spend a little more than that.

While homeowners are likely to keep that final number and down payment in mind as they build their budget, there is one important value that often gets overlooked: Your monthly expenses.

As you plan your search and begin to explore your options, keep track of your weekly expenses to get an understanding of what your current spending looks like. You’ll also need to factor in any one-time expenditures such as moving trucks or new furniture.

The good news is that the Tampa Hillsborough Economic Development Corporation has reported that the cost of living in Tampa Bay is lower compared to all other metro areas in the U.S., so once you’re settled in it’s smooth sailing.

Do I need a home inspection before move-in day?

In almost all cases, yes. A home inspection can reveal costly problems that you may be able to get the current owners to fix before moving in — without this, you may find yourself footing the bill in the months to come. An average home inspection generally costs anywhere from $350 to $500, however rates can quickly go up depending on the size of your home.

Pro tip: When you buy a home with Bungalo, you won’t have to worry about this step as we inspect every property from top-to-bottom. Plus, our certified homes come with a 90-day post-close protection warranty — if anything unexpected comes up we’ve got your back.

How do you plan to purchase your home?

If you’re not local to Florida, diving head first into buying a home can feel overwhelming. From trying to connect with a real estate agent that understands what you’re looking for to finding the time to fly or drive down to tour homes, the process can be an extensive one.

At Bungalo, we’re here to change that.

When you shop for your home with us, you’ll have a clear path and the guidance you need to close on your home as quickly as possible. With our virtual touring options and our stress-free lender policies, you can spend less time refreshing new listings and more time enjoying your new house.

Learn more about buying and selling your home with Bungalo and, when you’re ready, explore your options when it comes to living in Tampa. *This article is meant for informational purposes only and is not intended to be construed as financial, tax, legal, real estate, insurance, or investment advice. Bungalo always encourages you to reach out to an advisor regarding your own situation.

Charlotte, NC, is an exciting place to buy a house. This is true whether you’re chasing down a great job offer, seeking out a perfect place to own your own home for the first time or just looking for a change of scenery.

While Charlotte might once have been considered a hidden gem of a city, the secret is out. The real estate market in the area is hot, and people are relocating to the southern city at a rapid pace. Amid all the hallmarks of high-demand conditions, from limited inventory to bidding wars, how can you find your perfect Charlotte house?

There are a few strategies that can help you when buying a house in Charlotte. The first is to do your research carefully — by selecting an area and house type that fit your needs, you can avoid buyer’s remorse. The second is to make sure you’re going through the right channel. A service like Bungalo® can make house hunting easier and less stressful, even in a hot market.

As you begin searching, it pays to consider where the Charlotte real estate market stands, to help you find your place in it.

What is the current Charlotte housing market like?

Limited inventory, elevated demand, plenty of buyer interest: These are a few of the prevailing trends in Charlotte housing. As with many cities drawing new arrivals, Charlotte combines several different traits buyers are looking for.

First of all, Charlotte is home to many businesses, especially in finance. When these large banks and other corporations hire new employees, they move to town and lay down roots. Even in an era when remote work is more widely accepted than ever before, being close to the office can be an alluring prospect.

There are reasons for moving to Charlotte that go beyond work. For instance, the cost of living remains low compared to larger and more densely organized cities. That affordability will help a family budget go further. If you’ve been freed up to work remotely from anywhere, Charlotte is worth a look, especially if you’re planning to settle down for a long time. After all, a low cost of living keeps paying dividends month after month.

The demand for Charlotte homes stayed high through the strictest pandemic-necessitated lockdowns in 2020. The Charlotte Business Journal reported this was due to waves of newly remote workers arriving from all over the country. The suburbs, with roomy houses and yards, were especially popular during this period.

While those patterns have abated somewhat, you’ll still have to deal with intense home buyer interest. When asked to project future trends, Kelly Marks, president of the North Carolina Realtors Association, told WCCB Charlotte inventory will remain low. There are more people moving to North Carolina than leaving, and new businesses are consistently opening their doors in the state.

This steady demand has also made Charlotte homes good investments. Holding property in a hot area has been potentially lucrative for real estate investors who bought in before the present period of demand.

Buying in a high-intensity real estate market

People are moving to Charlotte instead of away, both to work from home and to take in-person jobs. That is causing consistently low inventory. Where does that leave you? Fortunately, you don’t have to give up on your homeownership dream.

When you’re working with a simplified real estate buying channel such as Bungalo, you can circumvent some of the headaches of a high-speed housing market. The easy-to-navigate map interface lets you find homes worth investigating, and the home prices quoted are clear and fair, based on other properties in the area. You don’t have to engage in bidding wars with other potential buyers, simply submit your offer online.

What area of Charlotte is right for you?

When you’re studying the map of the Charlotte metro area, you’re likely looking for a little context. Which part of the city will give you the best access to the amenities and Mecklenburg County destinations you’re most interested in? Alternately, you may be wondering which parts of town deliver the most square footage for your dollar.

If you’re in the market to buy a home, you’re probably looking for an area with tree-lined streets and single-family homes rather than the skyscrapers of Uptown. With that said, you should think about your ideal proximity to the hustle and bustle of the city.

Do you plan to commute to a job in the urban core? Maybe you expect to take in Carolina Panthers games? Or, perhaps you’re visiting the NASCAR Hall of Fame? The highly developed area in the center of the city is home to both family attractions and office towers, so even if your new home isn’t there, you may want to make sure you’re near a light rail station for easy access to the core.

As you move west from this hustle and bustle, you’ll get closer to the airport, a feature worth thinking about if you expect to come and go often. The west is also home to a massive park featuring attractions like mountain biking and whitewater rafting.

To the south of the city, you’ll find leafy green spaces. This is where some of the city’s expanding suburban neighborhoods are located and a potential place to lay down roots and start a family. It’s not the only place with greenways and walking trails, however — these are common throughout Charlotte.

How do you pick the perfect Charlotte house?

You’ve probably got a few traits in mind for your ideal Charlotte house beyond where it’ll be located. For example, the number of bedrooms and the balance of indoor and outdoor space play a huge role in determining whether you’ll be happy and comfortable in a home. You can also consider whether you’re looking for a historic house, new construction or something in between.

You likely have a solid idea of how many bedrooms you need. Of course, you may want to add to that number for guest rooms or to convert some rooms into office space. In an era of remote work, having a dedicated professional area is valuable.

There’s also the option of buying a house that your family will grow into if you plan on staying for a long time. The bigger the home, the more costly, naturally. You can offset the expense by potentially moving farther from the city center — and the relatively low cost of living doesn’t hurt.

A big yard is good for both kids and pets, or just for you to enjoy the fresh air. During the height of COVID-19 lockdowns, yard space was an especially valuable commodity as people sought relief from staying indoors all day.

Old vs. new construction is a matter of preference and practicality. When looking at old homes, it’s especially important to make sure no structural problems have set in over the years, and to negotiate a price decrease if so. With that said, there are ways to avoid the uncertainty around potential renovations. For example, Bungalo Certified homes are extensively repaired and inspected before buyers move in, guarding against surprises.

What’s the simplest method for buying a house in Charlotte?

Using a modern, streamlined service such as Bungalo to browse for a home is a useful way to circumvent the trickiest parts of the real estate process, especially when you’re dealing with a hot market. From competitive bidding to extensive appraisals, these time-consuming steps have been removed, allowing you to move into your new Charlotte home quickly and confidently.

Even touring a property is easier with Bungalo, handled via app and on your schedule. You can make the most of your house hunting days, making visits to the likely homes you’ve picked out online. When you find one you want, you simply make an offer backed by a mortgage preapproval letter from a lender. It’s either accepted or not, with no haggling or competition.

Closing follows a simplified checklist, and you can be confident in the house’s condition. If a covered issue with the home does pop up within 90 days of move-in, it’s simply handled at no cost to you.

Once you’ve taken the stress out of the real estate process, you can sit back and indulge in your Charlotte house hunt. Getting ready to move to this Southern metropolis can and should be a fun time for you, whether your primary objective is business or simply enjoying life.

If you’re prepared, get started with Bungalo now.

*This article is meant for informational purposes only and is not intended to be construed as financial, tax, legal, real estate, insurance, or investment advice. Bungalo always encourages you to reach out to an advisor regarding your own situation.

So, you’ve decided: It’s time to start looking at the real estate market outside of your state. Maybe there’s a new job offer. Perhaps you’re looking for a vacation home or second house. Or, it could just be a time for a change of scenery.

In some ways, choosing to buy a house in a different state is just the same as buying one down the street. You’ll still need to think about issues like mortgage financing and monthly payment structures, set aside some money for closing costs and hire the movers.

In other ways, moving out of state is a unique experience. You’ll have to answer questions about paying tax on the new home while finding a way to tour and inspect the property, though it may be located far away.

Some of the practices that can help you most during your home buying journey are equally useful no matter how far you’re moving. Alternative home buying platforms like Bungalo, for instance, can put you in a new house quickly and efficiently, wherever your destination may be. With that said, it’s worth thinking about just what makes an interstate house search so unique.

Conducting a long-distance real estate search

Looking for a new home in another state almost inevitably means performing a good deal of online research. Even if you’re relatively free to travel, there will likely be plenty of digital searching before you close in on a property.

Giving yourself as much time as possible to complete this search is a good idea, as is looking up information about your chosen area as well as the houses themselves. Your process may start relatively broad but then narrow down as you become more certain about where you want to end up and the type of property you want.

Today’s real estate offerings sometimes come with virtual tours — take advantage of these where possible, and don’t forget to ask for any relevant inspection reports that might contain vital information about a house on your shortlist.

There is more to a house than its location and sale price, so getting a closer look via a tour can teach you a lot, even if that walkthrough is virtual. Traveling to visit multiple homes in the area is another potentially useful strategy, provided you can plan to use the time effectively.

It’s also important to be sure all the information you’re receiving is legitimate. Scammers sometimes prey on interstate homebuyers. When searching for a home through Bungalo, you can be sure every listed house is truly available, that the prices are accurate and that necessary renovations and inspections have taken place.

You may have assistance from your workplace if you’re moving to take a new position within a company. No matter the reason why you’re making a purchase, you have to decide whether to lead your own search or have a real estate agent on your side. If you go the latter route, you can call on a relocation specialist rather than a more general agent.

Taxes and legal requirements for buying a property in another state

What is the tax and fee structure in the state you’re moving to? How does it differ from financial requirements where you currently live? These are important questions to answer as early as possible in the home buying process.

The existence of an unexpected tax on any part of home buying can change the math regarding your readiness to pay closing costs or make a certain level of monthly payment. This means you should sort out questions around taxation early before you commit to a mortgage.

There are a few potentially surprising legal matters that can come up when moving from one state to another, and you don’t want them to trip you up. For example, how do you go about changing official documents such as your driver’s license and vehicle registration? Are there any other local programs you have to register for?

The cost of living can differ between regions for a variety of reasons, and some go beyond the obvious property and income taxes. Doing as much research as possible with people who know the area well is an ideal way to get ahead of potential problems or last-minute inconveniences.

The exact conditions around your new house may be different if you’re considering using it for an investment property or rental property instead of buying it as a permanent residence. This is very important to work out in advance, to make sure zoning laws and tax obligations don’t cause challenges to appear when you’re getting ready to close on the home.

Loan options when buying real estate out of state

As with any home purchase, your ability to secure a mortgage loan will play a big role in determining what type of new home you can move into when you move across state lines. While the general pattern is the same — find a lender, get prequalified, get preapproved, agree to final terms — there are a few special steps to take for a long-distance move.

For example, when searching for a mortgage lender, you should probably focus your attention on banks that mainly serve the area where you’re planning to move, rather than those around your current home. There is also the option of a national bank that serves both locations, so you can deal with the same financial institution at home and in your new state.

The mortgage application process can be somewhat extended when dealing with an out-of-state lender. It pays to factor the extra time into your calculations for the home search. As with any mortgage application, you will have to provide proof of your assets, your credit score and your general ability to pay off the mortgage.

Some banks offer a special relocation loan offering that is specifically designed for moving long distances. This joins a list of other specialty mortgage offerings, such as Veterans Administration and Federal Housing Administration loans, or modified options including jumbo loans. Each of these could be an alternative to a conventional loan.

As with any move, you can find the best possible terms for your new mortgage loan by seeking out offers from multiple lenders. You aren’t under obligation to work with a specific bank until the mortgage papers are signed, even if you receive a preapproval letter from that institution.

Your best options for your home search

If your workplace doesn’t come through with relocation assistance, it’s time to consider your options for the home search. Do you want to look through online listings yourself, turn to a real estate agent, employ a specialty service? All these options are open to you, and you can mix and match them, using a variety of channels to narrow down your home choices.

Working with a buyer’s agent is one way to learn more about the area where you’re planning to move. A professional can sort through listings and help narrow down your options to homes that meet your criteria. This is a conventional way to conduct the home search, but it’s no longer the only way to look, given the rise of technology in real estate.

Today, you have more options than ever when it comes to home search tactics. For example, when you launch your home search through Bungalo, you can simply point at a location on a map and browse available homes there. This is a way to immediately target a region where you’d like to move and see what your options are.

What makes Bungalo different?

With Bungalo home listings, there is none of the ambiguity that can plague more general real estate searching. The asking price listed for each house is calculated based on data from other sales in the area and designed for fairness. You simply submit your offer online, based on a mortgage preapproval letter, and it’s accepted or not — no tense bidding wars with other potential buyers.

You can use Bungalo whether you’re looking on your own or with help from a buyer’s agent. You receive cash back if you don’t have an agent receiving a commission on the sale, but if you want someone to help you search for a home in your new state, that’s also an option.

Once you’ve had an offer accepted on the house of your dreams, the closing process is simplified with Bungalo. All activities are sorted into a checklist for you to follow, and the houses have received the Bungalo Certified seal of approval — that means there are no outstanding issues. If a covered problem does unexpectedly arise in the first 90 days, it’ll be fixed at no cost to you.

If you’re ready to make a start in a new state, you’ll have to choose who and what to have on your side. Bungalo is a perfect addition to your house hunting tool kit, laying out great options and helping you make them yours.

*This article is meant for informational purposes only and is not intended to be construed as financial, tax, legal, real estate, insurance, or investment advice. Bungalo always encourages you to reach out to an advisor regarding your own situation.

To rent or own? It’s a question as old as the modern real estate market. The right answer for you and your family will depend on a multitude of factors — including your monthly finances, debt and interest in remaining in one place for an extended period of time. You’ll also need to look at the current market in your area or the area you plan on moving to and assess whether homeownership is a realistic possibility for you.

In this quick guide, we break it all down for you:

Pros and cons of renting

In many ways, renting is unquestionably the safe choice. You’ll put far less capital on the line initially and get the added flexibility of being able to leave at the end of your lease, whether that’s just a few months, a year or something longer. However, you’ll also have to adhere to the rules put in place by your property manager (something that can make it hard for a home to feel like “yours”) and lose out on the benefits of home equity and homeownership in general.

Some pros of being a renter include:

• Fewer costs upfront: Buying a house takes a lot of cash upfront. Renting doesn’t. With a rental agreement, you’ll get to sidestep the down payment process as well as the myriad of additional fees it takes to transfer a property title from one owner to another. You’re also a lot less likely to take out extensive loans to pay for your housing, unlike with a mortgage agreement.

That being said, many leases still come with additional upfront costs, such as a security deposit and, in some cases, a broker’s fee. Security deposits are paid to the landlord at the beginning of a lease and typically returned to you at the end of your stay, assuming you leave the unit in good condition. A single month’s rent is a fairly common amount for this payment. Broker’s fees are paid to the realtor who helped you find the place (if there was one).

• Additional flexibility: While not every house you buy will be your “forever” home, it still makes sense to stay in one place for a few years if you’re going to jump through the hoops of homeownership. Not so with renting. While longer-term leases are certainly out there, most leases are around 12 months, with some as short as one month. If you think there’s a good chance you’ll need to move in the years ahead to pursue a dream job or new adventure, a shorter-term rental agreement will probably make both logistical and financial sense.

• No added maintenance costs: Have a problem with your dishwasher? Loose doorknob? Just call your property manager! This differs greatly from a homeownership situation, where the impetus is on you to keep up the maintenance of your home — whether that means regular DIY projects or calling in a contractor.

Disadvantages of a rental property, meanwhile, include:

• No renovations / home improvement projects: Since there’s no guarantee you’ll be staying in your current location on a more permanent basis, it doesn’t make sense to invest a large chunk of cash into new countertops or a bigger bathtub. In addition, many leases will limit the kinds of alterations you can make to a property. After all, it’s not really yours to renovate.

• Adherence to property manager rules: In addition to committing to the renovations your property manager decides to perform, you may also need to adhere to some additional rules. This could be anything from policies that limit indoor smoking to quiet hours (especially in an apartment building where you’ll have neighbors) to a ban on certain pets. That’s a lot less autonomy than you may want for your new place.

• No equity: When you pay a mortgage you’re paying yourself. When you send a rent check to your landlord, you’re not. For the most part, the value of a home increases over time, barring factors like a property in disrepair, a decrease in livability in the area or a housing crisis. That means when you do choose to put your home back on the market, whether it’s a few years or a few decades down the road, you stand to make an extensive windfall. By renting, you lose out on this potential for equity.

Pros and cons of buying with a mortgage

If staying in a rental is the safe way to maintain the status quo, homeownership is your big jump into the unknown. Everything is a little bigger in the homeownership process: A bigger time commitment, larger upfront costs but also higher potential financial dividends. Are you ready to take the leap?

When you own your own home you get advantages like:

• Ongoing equity: Few investments pay such consistent dividends as homeownership, especially if you plan on remaining in your new abode for many years to come. According to a 2020 report from the Federal Reserve, the net worth of homeowners is a staggering 40 times higher than that of renters. While some of this is self-selecting (wealthier people can more easily afford to own a home) it also says a whole lot about the way properties tend to increase in value over time.

While the market is certainly hot right now, making the mortgage rate on the home of your dreams a little more expensive than it might have been a few years ago, the potential long-term financial benefits of homeownership remain the same.

• Be your own property manager: Having a property manager is a double-edged sword. On one hand, responsibility for the upkeep of the building falls to them. On the other hand, not every property manager is great about fulfilling this responsibility. Rather than wait for repairs or ask permission to make the changes you want to a home, why not take charge yourself? Homeownership means not having to answer to anyone when you repaint your kitchen or hire a contractor to build a deck in the backyard. It also allows you an extra level of privacy from random visits. There’s just something about a home truly being your home.

• Be someone else’s property manager: Depending on the size and kind of home that you buy, you may be able to turn a part of your property into an extra unit for rent. Ideal homes for this kind of setup include duplexes, triplexes and properties with a detached unit, like a pool house. You can also decide between offering long-term leases for your space or short-term options through websites like Airbnb. Of course, properties with more space may also cost more initially.

However, there are some drawbacks, including:

• A high barrier of entry: Buying has a far higher upfront cost than renting. Of course, if you have the money to handle these payments and still have enough left over for other monthly expenses and savings, then you get to take advantage of the additional equity of homeownership mentioned above.

• Limited flexibility: The flip side of the flexibility of renting is the inflexibility of homeownership. Owning property ties you to one place at a time — ideally for multiple years so you can build up equity before resale.

• Property taxes: In many parts of the country property taxes are no joke. According to nonprofit organization Tax Foundation, the median property tax in places like the New York City metro area, New Jersey, Chicago and much of coastal California top more than $4,000. If you don’t live in as hot of a housing market, you may have far lower rates. While property taxes are important, as one of the primary ways that states and municipalities get funds for education and many other important services, it may be a financial burden that you’d rather not deal with at this time.

Rent or buy a house: Making the decision

Ultimately, the decision to either rent or buy a home should come down to your financial position and where you see yourself in the years ahead.

Of course, even if you’re feeling ready to settle down or need the extra space, you’ll still need to remember the obvious: Houses are expensive. In addition to the cost of a down payment and monthly mortgage payments, you’ll also need to calculate a slew of additional fees and payments, both upfront and down the road (called “hidden” costs). Some common examples of upfront costs include transfer taxes, a recording fee for your state and a whole variety of closing costs. Hidden costs of homeownership include property taxes, any renovations you’ll need to undertake and homeowners association (HOA) or condominium association fees.

Overall, a good rule of thumb is that your monthly mortgage should fall between two and two and half times your gross income. If you can’t purchase a home that meets your needs within those limitations, it’s probably best to stick in the renters market for now.

Not only should your finances be in good shape now, but also be set up positively for the future. While the upfront costs of buying a home are substantial, you’ll also need to be able to consistently make each monthly mortgage payment for years, perhaps even decades. Even if you have plenty of money saved up now, be sure you’re also in a career or financial position that you think will stand the test of time — otherwise, your savings may not go quite as far as you had imagined.

Find the right real estate strategy for you

If your path forward will include buying a new home, then you should buy through Bungalo. Our innovative approach takes as much of the hassles, haggles and guesswork out of the home buying process as possible. In addition, our rigorous inspection and certification process means that you won’t have to worry about major surprises and maintenance costs down the road.

Here’s how it works:

• Work with the mortgage lender of your choice: Get preapproved with the lender of your choice. Whoever offers the best deal for you, we’re happy to work with them.
• Make a paperless offer: You can submit your offer online in minutes. No guesswork needed.
• “No Hassle” purchase price: Bungalo homes accept the list price on a first-come, first-served basis. That means every willing and able homebuyer has an equal opportunity to own one of our homes.
• Closing assistance: We offer an easy-to-use closing checklist that ensures you’ve done everything you need to hit your move-in-day target.

Home buying has become unnecessarily complicated. With Bungalo, it’s easy. Reach out today to learn more about who we are, and how we help potential buyers find the homes of their dreams.

Bungalo. Your clear path home™. *This article is meant for informational purposes only and is not intended to be construed as financial, tax, legal, real estate, insurance, or investment advice. Bungalo always encourages you to reach out to an advisor regarding your own situation.