My New Blog

BENEFITS:

Now that we've discussed operating out of FACT and not FEAR,

looking into the facts of whether it's best for you to consider BUYING or RENTING,

and assuming you've come to the conclusion it might be better for you to buy vs. rent, let's look at the benefits of buying vs. renting:

1. Your payment is stable (except for taxes and insurance, your payment is contestant for 15 or 30 years). Now, of course taxes and insurance can go up, but so will rent each year. Rental prices are based on supply/demand. If there's a large supply and less demand, prices are lower.....if a small supply and large demand, prices will go up. You have no control over that and as there are always new renters getting into the market, it's likely rent prices would go up vs. staying stable or reducing. Taxes, on the other hand, can be disputed if you feel they are out of line with the value of the home.

2. You get tax advantages that you don't get renting. Your payment is typically LESS in purchasing than renting something comparable, and a large portion of that is tax deductible (mortgage interest and taxes) thereby reducing it even further. I suggest that after one year, you see how it affects your annual income taxes and if you get a large refund, change your withholding so you keep more of your paycheck each month and get less back in April. This way you have access to more of your hard earned money sooner than letting it sit interest free with the government.

3. You OWN something- you have the freedom to do what you'd like. This is HUGE. Most people don't consider the emotional aspect of owning a home. This is one of the most compelling reasons to purchase a home, if you are able. There is nothing like having the choice to paint the walls purple if you want vs. having a landlord dictate everything you can and cannot do. Or, to make improvements that you can enjoy the benefits of and knowing you're not improving someone else's property but your own!

4. The potential for profit that you don't get by renting. Of course, values could go down but now that we've hopefully learned our lessons that you can't artificially bolster a market without it falling down sometime, this is not likely to happen in the future. And, even if it does, you have the option to stay or rent your place out to someone else vs. selling. With renting, there is NO potential for profit except for the landlord.

5. Currently you are purchasing at the lowest prices since the early 1990's.

6. Interest rates are at levels not seen since the 1950's!

7. Costs and rates aren't likely to go much lower (they won't go to 0), so the only way for them to go is up. IF you wait, you'll be paying more for the house and for the cost of the mortgage. If they do dip lower after you purchase, it's not likely to be much lower than what you'd be paying right now. If they go up, you've missed an opportunity by acting out of fear rather than fact.

So; the long and short of it is:

1. Get trusted advisors; people that are referred by someone you trust, and give them ALL the facts to help guide you into making a sound decision for YOURSELF....not based on theory or supposition of what is happening in the "general" marketplace.

2. Don't operate in fear either way (fear of losing the house if you don't bid high enough OR fear of not making the offer because you might get it!) I've seen fear be one of the major factors in people making poor decisions; either to buy or NOT to buy. Operate on fact; either you CAN afford it or you CAN'T. Set your price based upon facts and stick to it; if you don't get it, you still are staying within your reality. If you do, you know the facts and made a sound decision based on facts. Congratulations!

3. Weigh the benefits of owning vs. renting and if the benefits outweigh the negatives, get into the game. But ONLY after you have TRUSTED ADVISORS that KNOW the local market helping you and you have given them ALL the facts on your personal situation that will help them to help you make a wise choice; either way.

Trust me: if they are truly "trusted advisors" they will say "don't do this" knowing they still plan to be around to help you when the time is right for YOU.

Next week's post will be on how to find those TRUSTED ADVISORS, stay tuned!

Till then,

weigh the pros and cons of going in EITHER direction before you make a decision,

Kim

Kim M. Laforet

Realtor

Coldwell Banker Hubbell BriarWood

Kim M. Laforet

Realtor

Coldwell Banker Hubbell BriarWood

serving the Greater Lansing, MI area since 1976

517-706-2555

kim@kimlaforet.com

www.kimlaforet.com

Having established IF it's better for you to buy than rent, now consider the benefits you get of OWNING vs. renting:

1. Your payment is stable (except for taxes and insurance, your payment is contestant for 15 or 30 years). Now, of course taxes and insurance can go up, but so will rent each year. Rental prices are based on supply/demand. If there's a large supply and less demand, prices are lower.....if a small supply and large demand, prices will go up. You have no control over that and as there are always new renters getting into the market, it's likely rent prices would go up vs. staying stable or reducing. Taxes, on the other hand, can be disputed if you feel they are out of line with the value of the home.

2. You get tax advantages that you don't get renting. Your payment is typically LESS in purchasing than renting something comparable, and a large portion of that is tax deductible (mortgage interest and taxes) thereby reducing it even further. I suggest that after one year, you see how it affects your annual income taxes and if you get a large refund, change your withholding so you keep more of your paycheck each month and get less back in April. This way you have access to more of your hard earned money sooner than letting it sit interest free with the government.

3. You OWN something- you have the freedom to do what you'd like. This is HUGE. Most people don't consider the emotional aspect of owning a home. This is one of the most compelling reasons to purchase a home, if you are able. There is nothing like having the choice to paint the walls purple if you want vs. having a landlord dictate everything you can and cannot do. Or, to make improvements that you can enjoy the benefits of and knowing you're not improving someone else's property but your own!

4. The potential for profit that you don't get by renting. Of course, values could go down but now that we've hopefully learned our lessons that you can't artificially bolster a market without it falling down sometime, this is not likely to happen in the future. And, even if it does, you have the option to stay or rent your place out to someone else vs. selling. With renting, there is NO potential for profit except for the landlord.

5. Currently you are purchasing at the lowest prices since the early 1990's.

6. Interest rates are at levels not seen since the 1950's!

7. Costs and rates aren't likely to go much lower (they won't go to 0), so the only way for them to go is up. IF you wait, you'll be paying more for the house and for the cost of the mortgage. If they do dip lower after you purchase, it's not likely to be much lower than what you'd be paying right now. If they go up, you've missed an opportunity by acting out of fear rather than fact.

So; the long and short of it is:

1. Get trusted advisors; people that are referred by someone you trust, and give them all the facts to help guide you into making a sound decision for YOURSELF....not based on theory or supposition of what is happening in the "general" marketplace.

2. Don't operate in fear either way (fear of losing the house if you don't bid high enough OR fear of not making the offer because you might get it!) I've seen fear be one of the major factors in people making poor decisions; either to buy or NOT to buy. Operate on fact; either you CAN afford it or you CAN'T. Set your price based upon facts and stick to it; if you don't get it, you still are staying within your reality. If you do, you know the facts and made a sound decision based on facts. Congratulations!

Ok, last week we discussed operating out of Fact vs. Fear. This week we're going to delve into whether you should even consider buying now. Rates are at all time lows, prices are down, why wouldn't it be the right time to buy? Well, it may or may NOT be based upon YOUR specific situation. Again, we can't generalize what we hear in the news and say it's a good time or a bad time.....it's all relative to your personal situation.

For you to make a decision based upon what the newspapers/friends/family say vs. what LOCAL, TRUSTED advisors say is akin to operating out of fear vs. fact.

So, how do you decide?

Well, it's generally Better to Buy than Rent if:

1. You plan to be in the area for awhile (how long is awhile? I would say at least 3+ years)

2. You have the down payment and know you can cover the costs (PITI and maintenance, utilities, repairs). Remember that once you own a house you would be more likely to eat at home/entertain at home/do things in the neighborhood that don't cost anything vs. eating out/going out for entertainment/going out for things to do that cost, so your monthly money will be reallocated to other areas; in most cases the maintenance, utilities and repair costs are covered by this change of lifestyle as you're spending less on those other areas.

It's generally better to Rent than buy if:

1. You are unsure you will be in the area within the next 3 years.

2. You don't have the down payment and your job is uncertain. If you have the down payment but your job is shaky (again, based on FACT and not FEAR) it may be best to sit tight in your rental. If your job is the question, go to the source that can give you answers instead of listening to coffee room gossip or worse yet, what the newspapers say. Go to the source and if the answer you get still leaves too much of a question in your mind, consider the worse case scenario. IF you are let go, are you in the type of career that you could easily find another? (good example is a nurse: if there are cutbacks at one hospital usually its because of poor management and not lack of need for that particular vocation. If it is likely you could get a job at the hospital down the street, check into what the pay would be and base your decision on the likelihood that something would be available to you.) Again, it's about doing your homework vs. basing your decisions on conjecture and fear.

Once you have established that it's very possible you will be in the area for at least 3 years and there's no impending layoffs that could affect you, consider only qualifying for a mortgage on ONE of your incomes if you have a partner. That way, IF something happens to one of your jobs, it will not affect your housing situation. This is how we used to consider things back in the "day". Yeah, I know; I'm sounding old, but sometimes old means wise ;) Tell my kids that will you?

Anyway, if you qualify on the most secure of the two jobs and set your buying parameters within that you'll likely be fine. After all, if you're renting based on both incomes and you lose a job, do you think the landlord's going to be ok with you making only partial payments? I think not. Factor in ALL of the FACTS and as I always say "plan for the worse case and hope for the best case". If the worse case scenario says RENT then do it; but if it says I can still buy and would be in a similar position if I were renting, then BUY.

Next week we'll discuss the benefits of owning vs. renting that you may not have heard before......

stay tuned!

Kim M. Laforet
Realtor
Coldwell Banker Hubbell BriarWood
Serving the Greater Lansing, MI area since 1976
517-706-2555
kim@kimlaforet.com
www.kimlaforet.com

I have seen fear do many things to many good people over my 35 years of selling the American Dream. Fear of missing out; fear of paying too much; fear of the unknown; fear of the "what ifs". Well, fear is NEVER a reason either to do or NOT to do something because it never seems to be founded in FACT.

So, let's separate the two:

When you operate in FEAR vs. FACT, you are likely to make poor decisions. Whether that decision is to move forward or stay put, if controlled by fear, it's likely to be a bad move. For instance, I saw folks 10 years ago afraid they would lose the house of their dreams if they didn't bid high enough. Notice I said "house" and not "home."

There IS a difference. A house is the brick and mortar; a home is your place of refuge, a place that you can be totally yourself and comfortable in. So, before making ANY decision, set your perameters. I can comfortably afford XXXXXX. Now, that I know this, I can get into the game KNOWING I have my guidelines in place.

If you go outside those guidelines, you might get the house, but trust me....it'll never feel like "home."

The second step is to determine how to set those perameters. I've seen folks able to spend much more on a home than they're willing to pay, only to get into a money pit. Look at the TOTAL cost of the home. If it's a great buy at 70k, but a similar home is at 100k there HAS to be a reason. The $70,000 is not necessarily the better of the two if you are not handy and have to hire everything done.

Meet with a local (NOT internet!) lender. The internet lenders give you the numbers; the local lender will give you sound advice no matter what the numbers say. I met a man recently that used to work for a well known internet lender and he said it was the biggest racket he'd ever seen. He was told to "make the loan" no matter what......they weren't on the line, the borrower and mortgage company would be. They are in it to make money! If you're dealing with a local lender, they have a reputation they want to keep if they plan on staying in business and getting more referrals from friends and Realtors. So, make your numbers based on actual numbers and not "what ifs" (what IF I get a raise, what IF I lose my job). It works both ways. If you are sincerely concerned about losing your job, make sure it's something you talk with your trusted advisors about. They don't want to see you make a poor move if they want your future business and referrals from you.

Once your price perameters are set based on the knowledge (another fact!) of who you are and what you are or are not capable of doing in repairs or improvements to a home, work with a trusted Realtor that knows the market you're in. The best advice you will get is from a Realtor that says "in my opinion it's not the best time for you to purchase a home because......." OR "in my opinion it's a good time for you to purchase a home because......" That Realtor should know the market, have a good reputation (seek references) and be willing to stand between you and a poor decision. Of course, the decision is always your's to make, but why are you enlisting the help of a trusted advisor if you don't take their advice?

Next week we'll discuss the factors to consider if NOW is the best time for you to buy or is it better for you to wait:

Preview: it's not always better to buy vs. rent. Find out where you lie in the spectrum.

Till next week,

Base your decisions in all of life's areas on FACT and not FEAR!

-Kim