Are you throwing money out the window by renting? More than likely, yes. But this can be a complicated decision based on several different factors. Sure, you can try the many rent vs buy calculators online, but I have found so many not to be the same as the first one.
When should you not buy a home?
- If your rent is very low. (usually 2/3 or less of your monthly payment)
- You intend to move in a few years. (unless you get into the house with no money out of pocket)
Is this statement, "throwing your money away on rent", a myth? It certainly can be and here is why. When you buy a home, you still have expenses unlike renting.
- maintenance
- original closing costs when buying the home
- monthly property taxes
- yearly homeowners insurance
- sometimes mortgage insurance [but there are many types of PMI loans (Private Mortgage Insurance)] If it's a FHA loan, there is monthly mortgage insurance, but it's cheaper than conventional MI.
Okay, are you confused, since I have mentioned some negative reasons why not to buy a house. It's because the positive reasons will outweigh the negative reasons of buying a home. Key word being usually. Your home can become your own personal bank.
Positive reasons for buying a home
- You can write off the interest yearly
- You can deduct the points that you paid when purchasing, the 1st year
- Your home will appreciate, becoming more valuable over time ******
- Pride : The home is yours. You can basically do what you want, within reason.
- Once your home is paid off, you just have yearly taxes and homeowners
Overall, this is the best time to buy. Home values have dropped in many places and they are now leveling out, stablizing. Also, rates are still low.... anything from 6% to 6.750%.
In Part 2 : I will talk about comparing renting vs buying in dollar figures. And I will also introduce a few different types of programs to help you in buying your dream home.
The First Time Homebuyer Series :
- First Time Homebuyer Tips : FHA, is the best mortgage program? -- Best Programs & Why -- Part 3 of 4
- Renting vs Buying -- Showing the difference in $$ -- Part 2 of 3
- Renting vs Buying -- Knowing your loan options -- Part 3 of 3
Buying Tips :
- FHA Loans - Conventional Loans - VA Loans -
Experience & Knowledge at its BEST !!!
____________________________________________________________________________________
For more information on FHA loans, please go to this link. The FHA Expert
For more information on how you can obtain your dream home, please click here : Mortgage Financing Options
For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!!
Copyright © 2008 by Jeff Belonger
Jeff, you can learn alot about renting versus owning by taking a CCIM corse. Go to www.ccim.com Good blog Thank You Sir.
Jeff,
Great info.
Thanks for sharing.
Look forward to Part 2 & 3.
Jeff, great advice, as usual. And yeah, when you own the place there's no landlord to call when you need a drain snaked! But you can learn to appreciate the appreciation!
Hi Jeff,
This is a great post! Thanks for sharing.
Best wishes!
Joyce Logan, Realtor Real Living HER, Ohio
Romanelli & Hughes Custom Homes
Jeff,
It is nice to have something broken down for better understanding. I read a book that actually gave figures that was very informational but darn if I can find it. Thanks for refreshing my thoughts to keep looking for it.
Jeff, great post. I like how you lead with the reasons one may want to rent, then show how owning a home has so many benifits to a person or family.
Hi Jeff. I like this post. I need to start marketing harder to buyers. I always direct my marketing towards the listings.
Thanks for writing,
Ken
ROBERT...... . why is that on a commercial site? Commercial and residential is totalling different. Sorry, but that is my opinion.
LINDA..... . my pleasure... thanks for stopping by and for the compliment.
PATRICIA....... . learning is not that hard... and it can be cheap. Plenty of self-help books.... but yes, you can basically do anything if it's yours. Thanks for the kind words and polite compliment.
JOYCE..... . hey, that looks pretty close to Linda's comment. Seriously, thanks...
KATHARINE...... . I think it's always great to have things broken down... especially when it comes to the myths of renting or buying... to see it side-by-side... please let me know if you find that other information.
TIN & PAM....... . thanks... I like to show the negative first and then roll right into the positive stuff. I think it's good to do that for several reasons. thanks for the compliment.
KEN..... . yes, since this is a buyers market and they shop online.. yes, you need to address buyers and market to first time homebuyers. thanks for the kind comment...
Look forward to the rest of this series - you always give such great info for the agent and the consumer - thanks Jeff - we are seeing prices that if people dont take advantage of they are missing the boat
This is good advice Jeff. I like the way you differentiated between who should and should not buy, based on how much they pay in rent.
Jeff,
Thanks for the post. Good advice and it can never be overstated, especially to the qualified buyers in this market.
Jeff, thanks for this post, I am seeing alot of clients weighing this out right now.
Jeff, top notch post on FHA.