Kristie Lorette McCauley

Renter vs. Buyer Quiz: Which are You? To own or rent a home, that is the question. The problem may be that you're not really sure if you're ready to own a home, even if it’s part of the American dream. Well, you've come to the right place. Take this short quiz, add up your score, and find out whether renting or owning is in your future. 1. When your friends describe you, they say: a. He/she can fix anything! b. “What’s a tool?” is your motto. The correct answer is a. When you're a homeowner, you're also responsible for fixing, repairing, and replacing anything that may go wrong in the home—fixing it yourself or paying someone to fix it for you. When you're a renter, however, all you have to do is pick up the phone and call your landlord when something goes wrong. If you chose a, give yourself one point. If you chose b, give yourself zero points. 2. How do you feel when you look at your savings account balance? a. Your heart drops, which is where the balance is—low. b. A smile spreads across your face because you have quite a golden nugget there. The correct answer is b. Homeownership is not just about being able to make the monthly mortgage payment; it's also about having the money to pay for any upfront and ongoing costs that come along with homeownership. When you’re a renter, the only costs you have to worry about are your rent and normal living expenses. If you chose a, give yourself zero points. If you chose b, give yourself three points. 3. Have you declared bankruptcy in the last seven years? a. Yes b. No The correct answer is b. When you file for bankruptcy, it remains on your credit report for up to seven years. The majority of lenders don’t like to see a bankruptcy on a potential borrower's credit report. While bankruptcy doesn’t totally preclude you from obtaining a mortgage, some lenders won't lend you money because they see you as a high risk. Other lenders will lend you the money but the terms and conditions won’t be as favorable. If you chose a, give yourself -2 points. If you chose b, give yourself 2 points. 4. Your credit score is: a. In the mid- to high 700s b. Below 700 The correct answer is a. After the downturn in the economy in 2007, lenders are looking for borrowers with high credit scores, which on average is 720 or higher. If you chose a, give yourself three points. If you chose b, give yourself zero points. 5. If you divide your total monthly debt by your gross monthly income: a. The rate is higher than 38 percent b. The rate is lower than 38 percent The correct answer is b. The higher your debt amount, the higher of a risk you are to the lender. Lenders look for borrowers that can afford to take on the responsibility of a mortgage payment rather than someone who is drowning in debt. If you chose a, give yourself -3 points. If you chose b, give yourself three points. 6. Have you had a property foreclosed upon in the last three years? a. Yes b. No The correct answer is b. Lenders do not like to see a foreclosure on the credit report of a potential borrower because it’s a sign of an irresponsible borrower. The Meaning of Your Score Zero or less: The dream of homeownership isn’t in your near future. You're better off staying a renter for now. It doesn't mean homeownership isn't in your future; it just means you have some work to do in the meantime. Look back at the questions that dragged your score down and determine ways to correct the problems. One or higher: The dream of homeownership is in your very near future. You have all of your ducks in a row--meaning you are ready financially and emotionally to take the next step, which is the American dream of owning a home.