Loan Money

Real estate has been promoted as the road to riches, and everybody assumes that their home will be more than just a place to live, but also a wonderful investment! For most of us, our homes are the most expensive thing we own. And of course, in our society, the type of home we occupy says something about us to others. But when we look closely, it is not as clear that giving up our rental for a homewe own is really the best decision for everybody!

If we really sat down and looked at the interest we have paid, repairs we have made, general upkeep, etc., then the totals may be shocking. The $150 to the plumber and $750 to the air conditioning company may have been spread out over a couple of months (we hope), but we need to add them into the costs of home ownership, since most renters do not need to pay these bills. Mortgage interest may be tax deductible, but it still needs to be paid, and so consider that portion that we could not deduct. Also consider various property taxes and homeowners insurance bills that may have been included in the mortgage payment, or may come as lump some bills that need to be paid a few times a year.

We Need to Live Somewhere!

Look at it this way. We all need to live somewhere. However, consider what you really require. You need a place to live with functioning utilities in a safe neighborhood. If you have kids, then access to good schools will be on your list! If you are renting a home or apartment right now that satisfies your basic needs, and your finances or situation are not stable, you may want to hang on for awhile.

Every Realtor or mortgage broker, will try to convince you that paying rent is just like throwing money away. However, home owners also have plenty of opportunities to dispose of money as well. If you have made an honest analysis of owning your dream home vs. renting for bit longer, and found that home ownership will take a far bigger tent out of your wallet, you can consider other opportunities for investment that are much more liquid than a home!

Before you purchase a home, make sure you want to stay in the area for awhile. Ownership tends to work out better in the long term, but renting works out better over a year or two. Make sure you have enough cash in the bank to cover your bills for a few months in case you lose your job or hit an unexpected financial emergency. It is certainly a lot easier to get out of a lease for a hardship than it is to sell a home quickly!

Balance Joy vs. Pain

I am all for the stability of home ownership, and I do understand the attraction. You can paint your bedroom lavender, and make improvements without answering to a landlord. You will also present a more stable image to others, and over time, find security in your investment. However, if your finances or job location are not stable, renting may be a less stressful experience. If you are looking for an investment, advisers can point you in much more liquid directions than home ownership.