One of the things we are taught by our parents growing up is to buy a home as soon as you can and stop making other people rich by paying their mortgage payment. As a real estate and mortgage professional, I have seen some problems over the years. I have watched folks who were not quite ready for homeownership press forward to get their home only to regret it later. I am all for home ownership, but only when it makes sense. I am going to play devil's advocate for a little bit and ask: do you really want to own a home? Let us take a look at some of the advantages of renting versus owning a home. Only you can decide what works for you.
Advantages of Renting Versus Owning a Home
One of the most obvious reasons for renting is that you have flexibility. You can just pick up and move without the worry, hassle and expense of selling your home. Owning a home limits your ability to easily change jobs from one location to another. If you get a new job across town, you cannot just move out if you are a homeowner; you either have to sell or lease your property.
Selling a home is not only expensive but you have no control over how long it will take to sell. Depending on the real estate market in your area you may actually loose money if you have to sell to move. If you cannot or do not sell it in time you could lease it. But, leasing your property brings whole of slew of other challenges that can cost you a whole bunch of money if you rent to bad tenants who cause property damage while they live in your property.
Another benefit of being a renter is that generally housing expenses are cheaper. For starters, you do not have to do repairs to your property. All you have to do is call the landlord. You never know when the roof will leak, when the appliances will go out, or the piping in the second floor bathroom break, etc. But as a renter, these things are not your problem, other than to get the property owner to fix them.
Extra Expenses with Owning a Home
As a home owner you are likely to have a mortgage. A mortgage is a loan on your property which in most cases is scheduled to be paid every month for typically up to 30 years. In addition to the mortgage payment, you will have other payments to make as well such as real estate taxes, home insurance, and homeowners association fees. These fees add up quickly depending on where you live and can easily exceed your rent payment.
Call the Landlord, Oh That's Me
From the homeowners standpoint, there is no landlord. If you own your home, you are the landlord and you have to pay for the property repairs as they come up. I recently had to have my roof re-foamed and it cost me over $5,000. I still need to have a plumber come out and figure out why the waste lines from my dishwasher are not draining correctly. I cannot wait to see the bill for that. Some days I wish that I was renting.
In all fairness to homeownership, I think we need to look at the facts.
You do need to do your homework when buying a home. Use a real estate professional that has years of experience working in your area. A good Realtor can be worth their weight in gold. You also need to do your homework when it comes to your finances and financing options. GetPrequalified.com has some great resources. Review the Steps to Buying a Home. Review mortgage loan programs.
While renting has its short term advantages, it does not necessarily build individual wealth through owning real estate. So make sure you are ready to purchase and then do it.
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