How do you know if it’s time to buy a home?

Earlier this year, a report from Moody’s Analytics found that the typical American renter is now “rent-burdened” — meaning it takes 30% of the median U.S. income to pay the average rent.

And Alabama had one of the country’s highest increases in rent burdening over the past three years, at +4.2%.

It’s been trending in this direction nationwide for decades, but this is still a milestone — it’s the first time our rent burden has crossed the 30% threshold in decades of tracking. And this likely isn’t comforting to people across the Gulf Coast (and elsewhere) who are struggling to balance the cost of living.

It also begs a question: How do you know if it’s the right time to buy a home, or if continuing to rent is the more cost-effective option?

Buying vs. Renting

Buying a home is a major investment and, for most people, one of the biggest financial decisions we’ll ever make. Unfortunately, the honest answer to the homebuying question is usually, “It depends.”

Calculating a mortgage payment and comparing it to rent shows just a sliver of the picture. Where you live, your income, your career, your lifestyle needs, and future plans all figure into the calculation too.

Tools you can use

To help give Merchants & Marine Bank Clients a more complete idea of the financial differences between buying a home and renting, we added tools to our website that can help you calculate the variables. Here are a few to look at if you’re considering buying a home:

1. Mortgage Qualifier

Step one: Determine a budget you could reasonably manage.

You can calculate a home-buying budget with our Mortgage Qualifier based on your annual income or your target monthly payment, and it walks you through the process of adding up how much you could borrow without maxing out your housing burden. (It factors in things like mortgage loan term and down payment to give a more detailed breakdown.)

Try out the Mortgage Qualifier here.

2. Mortgage Comparison

If you aren’t clear on which mortgage term fits your needs, the Mortgage Comparison calculator can help you compare 15- and 30-year mortgages.

Each term has pros and cons depending on your circumstances, and you’ll get a better understanding of which suits your budget and plans by running the numbers.

Check out the Mortgage Comparison calculator here.

3. Rent vs. Buy calculator.

The goal of the Rent vs. Buy calculator is to make a complicated question feel more clear.

It helps you compare the financial pictures of renting versus buying a home, including all the associated fees, taxes and regular payments.

The data it delivers is only as exact as the data you put in, but it’s easy to use and can give you a sense of when you’d “break even” on buying a home.

Click here to try the Rent vs. Buy calculator.

Have questions calculators can’t answer?

For a lot of people, talking to a mortgage loan expert is the most comfortable and thorough way to weigh out whether it’s the right time to start house hunting.

Whether you live in one of Merchants & Marine Bank’s communities or you’re looking to buy a home elsewhere in the country, our colleagues at Canvas Mortgage can answer your homebuying/mortgage questions — with a community bank’s level of care and service.

Reach out to the Canvas Mortgage team here.