My New Blog

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!