Better to Rent? Or Is Now the Best Time to Buy a home?

With mortgage rates at a thirty-year low, millions of renters are wondering if it is time to buy or is it better to rent.

The greatest partner to a low interest rate is a low home price. Coincidentally, housing prices have dropped steadily for nearly two years, and many economists feel that the housing market will be bottoming out soon. Anyone wanting to capitalize on the low rates and the low home prices should be advised that qualifying for these great rates will not be a cake walk. Financial institutions are becoming much more stringent with their lending guidelines.

In order to qualify for a great interest rate, you must have a great credit score. A score of 700 and above is considered excellent. People in this range have no foreclosures, no bankruptcies, no late mortgage/rent payments, and almost no late payments on car loans and credit cards. If you are in the 700 and over credit score range, you also have paid your utility bills on time and have probably never had a collection agency call you.

If this is you, it might just be close to the best time to buy a home. If this is not you and you cant qualify for the low 4.5% interest rates that are supposed to be on the way, you may be better off to keep renting until you can clean up your credit.

Remember, every bill you pay is subject to being recorded on your credit report. People with good credit know this, and they are diligent about paying all their bills and paying them on time.

My husband, Joe, went into business with a partner a couple of years ago. My husband’s credit was the better of the two, so Joe’s name went first on all the joint accounts of the business. It was easier for the partnership to get credit that way. Long story short, the business fell apart, all the bills came due, and the partner was nowhere to be found. Because it was our good credit on the line, we swallowed hard and paid the bills off ourselves. We hope one day to collect from the partner for his share of the debt, but we did what we had to do to save our credit. Paying those bills was burdensome, but here’s the payoff.

There is a neighborhood near ours that my husband and I have always loved. The price range was a little out of reach for us a few years ago. With the decline in the housing market, the prices in that neighborhood have dropped enough so that we can afford to live there now. We will be able to take advantage of the low rates and the low home prices because we have preserved our high credit rating. I can say with full assurance that guarding your credit is the biggest financial favor you will ever do for yourself.

If your credit is not where you want it to be, this web-site has great self-help tips for how to repair your credit. I will also be offering an e-book on how to build excellent credit in early 2009.