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WHERE ARE YOU SPENDING YOUR MONTHLY "HOUSING" DOLLARS?

By
Real Estate Agent with Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate 303829;0225082372

CONSUMERS:  WHERE ARE YOU SPENDING YOUR MONTHLY "HOUSING" DOLLARS?

Do you rent your home?  Or, are you buying your home?

Just because a budget for housing is moderate, that doesn't mean a person should forego the benefits of home ownership. 

Inspired by a post this a.m. by Fred Cope.  See HERE.

When buying their first home, the new home owners are probably going to acquire a long time debt.  If the price of their new home is $100,000, the amount financed is probably going to be from 80% to 100% of the purchase price. 

YOU DO OWN YOUR HOME.  What is often overlooked is that, while the home purchase may be financed, the home is OWNED by the persons who purchased it.  Following the purchase, owners will usually pay for the home through regular payments which are a combination of small but increasing re-payment of the principle (loan amount) and large but diminishing payments of interest to the entity who owns or is servicing that home loan. 

ARE YOU MOVING FROM YOUR PARENTS' HOME OR FROM A RENTAL??

When first time home buyers are purchasing their first home, if they are moving directly from their family home, they will be acquiring a new monthly expense for housing

If those first time home buyers have been renting, rather than paying monthly rent for housing, they'll be paying a monthly mortgage payment for housing.

Benifits of Renting.  The obligation for monthly payments are limited to the terms of the lease agreement, usually one year.  For transient employees, this may be a safe decision.  Taking on the long term obligation of owning real estate involves certain risks.  A few are:

Difficulty selling in short periods of time
Escalating mortgage payments with ARM products
Loss of income
Relocation for employment

 

Benefits of Buying.  The most important benifit to home ownership is the stability offered for stability through long term occupancy.  The dream of home ownership is supported by the money the housing industry contributes to the U.S. economy.


      Permits long range planning for schools.

      Growing wealth through property values
      More choices for location in rural areas.      
      Ability to decorate and remodel to suit family needs
      The potential of living free of a monthly housing cost.


Rent or buy.  You'll still be making a payment for housing every month.   Only through home ownership is the dream of living without a monthly payment for housing possible.

 

                                  

                                      Another benefit of owning your own home.

Courtesy, Lenn Harley, Broker, Homefinders.com, 800-711-7988, serving home buyers in Loudoun County, Virginia.  

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Comments(19)

Jeff Fritzson: Frisco Real Estate Pro
Jeff Fritzson Real Estate, Ebby Halliday Realtors - Frisco, TX
Your Success is My Focus!

Great post from both you and Fred. You both approached an important subject with slightly different perspectives. They both leave me with a great deal of information I can share in various ways with my new and first time home buyers. Thank you.

Jan 20, 2014 11:10 PM
Jay Markanich
Jay Markanich Real Estate Inspections, LLC - Bristow, VA
Home Inspector - servicing all Northern Virginia

This is an excellent post Lenn.  Obviously renting benefits some, particularly in the short run.  But overall, ownership is the way to go.  I believe that's called private property.

Jan 20, 2014 11:10 PM
Tom White
Franklin Homes Realty LLC (615) 495-0752 or www.FranklinHomesRealty.com - Franklin, TN
Franklin Homes Realty LLC, Franklin TN

Lenn, some great points for those consumers looking at the rent vs. own dilemma! If an individual is very uncertain about their future income or location, maybe renting relatively short term is a better option.

Jan 20, 2014 11:12 PM
Hella M. Rothwell, Broker/Realtor®
Carmel by the Sea, CA
Rothwell Realty Inc. CA#01968433 Carmel-by-the-Sea

Lenn: There is not one person that I have met later in life who did not say "I wish I had purchased real estate when I was young". And this is not just for those who need housing. My real estate investors all purchased early in their life and now reap the benefits. 

Jan 20, 2014 11:21 PM
John G. Johnston
John G. Johnston & Associates, LLC - Westcliffe, CO
An Exclusive Buyer's Agent ~ Westcliffe, CO

Lenn I always enjoy your blogs and you give me great ideas for future communication with clients.  Thanks for the link to Fred's blog.  Enjoy your day

Jan 20, 2014 11:31 PM
Lou Ludwig
Ludwig & Associates - Boca Raton, FL
Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC

Lenn

A person can paid a landlord . . . . or they can buy a home . . . . a person's housing dollars should be invested in home ownership.

Good luck and success.

Lou Ludwig

Jan 20, 2014 11:52 PM
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Jay.  What ever one wishes to call it, I always seem to fall back on there's just nothing like "HOME".

Hella.  Indeed.  Most real estate wealth in the hands of individuals is from housing. 

John.  What a wonderful comment.  I look forward to your ideas.

Lou.  Short and sweet.  Thank you.

 

Jan 21, 2014 12:02 AM
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Tom.  Of course.  That said, less than one year can be costly.

Jeff.  Glad to add a bit to your arsenal.

 

Jan 21, 2014 01:20 AM
Women of Westchester Working Together
Women of Westchester Working Together - West Harrison, NY
Women helping Women get ahead

Yes, and there definitely is increased wealth over time, esp over the long term. Not only is there wealth creation from property values growing (over the long term), but also, generally your mortgage is a fixed monthly cost (there are exceptions) whereas rent generally increases over time, and there are tax write off benefits as well.

- Debbie

Jan 21, 2014 07:05 AM
Pamela Seley
West Coast Realty Division - Murrieta, CA
Residential Real Estate Agent serving SW RivCo CA

Home ownership is not for everyone at different stages in their lives. You point out the benefits of renting, which are ability to relocate easily in case of job changes. For stability and wealth creation the benefits of home ownership are in favor over housing "costs" such as renting. 

Jan 21, 2014 08:58 AM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

Lenn:  Love your summation.  I'd hope it would spur some real thought by those presently renting ... 

Gene

Jan 21, 2014 09:58 AM
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

It's a wealth that is a very slow-growth, but once paid off . . . that's the real dream!  And it's possible, a 30 year loan can be wittled down to 23 years with one extra payment to principle a year.  Amazing what home ownership can do for your family.

Jan 21, 2014 10:21 AM
Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

There are pros and cons to buying versus renting.  It is important for everyone to determine what makes sense to them in light of their goals. Owning a home is not witout risk and expense.

Jan 21, 2014 12:06 PM
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher
I don't see why this shouldn't be a priority for everybody.
Jan 21, 2014 02:00 PM
Sally K. & David L. Hanson
EXP Realty 414-525-0563 - Brookfield, WI
WI Real Estate Agents - Luxury - Divorce

There is nothing like that feeling when you turn the key on the front door and know that this is yours....not the landlord's or the developer's and the smile it brings to first time buyers is a joy that can't be replaced.

Jan 21, 2014 06:48 PM
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Gene.  Not a bad idea.

Carla.  Slow but sure is and always has been the more stable and predictable way to make money grow.

Joan.  Of course.  Of course too, with the risk and expense comes financial opportunity.

Laura.  Only if it's understood and desired.

Sally and David.  BINGO!  That is what I mean when I say there's simply nothing that can compare with "HOME".

Jan 21, 2014 07:24 PM
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

The satisfaction one gets from accomplishing anything is lifes gentle kiss & hug

Jan 21, 2014 10:57 PM
Mike Cooper, Broker VA,WV
Cornerstone Business Group Inc - Winchester, VA
Your Neighborhood Real Estate Sales Pro

Lenn, I just met with a young lady last week who is selling and going back to renting. Her reason? She doesn't like doing home maintenance. Everybody is different, aren't they?

Jan 21, 2014 11:08 PM
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Richie.  May we have many.

Mike.  I don't like it either.  Just no alternative.  Still preferable to renting, IMO.

Jan 21, 2014 11:50 PM