Shopping for a home...... hhhhmmmm???? Do I Rent or Do I Own?

Real Estate Agent with Century 21, Trademark Realty

Courtesy of the Metro Homes Collection Real Estate Agents.

We have always told our clients that the basic premise when you are renting is that you are investing in someone else's future wealth and not your own. It's better to invest that money in the DC Metro Area Residential or Commercial Real Estate market that will make money for you. Long term this investment can turn into passive income possibly for your retirement, your portfolio, or allow you to draw money out if an emergency arises. Now is a great time to buy as prices are down and they will definitely come back around as facts and statistics has shown us.

 As the desire to rent instead of buy goes up, the rental amount may increase exponentially as it occurred in the late 90's into 2000. For those of you who are renting and being faced with a rent increase, you should look at what it would cost to own your own home. If you have considered purchasing a home before, now is the time to revisit the question.

With such a large investment, both of money and time, the paramount issue is educating yourself. The most effective way to do this is by using professionals and to supplement by using the Internet.  We are well aware of the changes in the DC Metro Area Real Estate Market and with the increase in the number of foreclosures recently, we have been made intimately aware of making more knowledgeable and wise decisions. Many people became home owners in recent years who may not have been able to own a home before. It is all about educating yourself and seeking the advise of qualified professionals.

Residential and Commercial Real Estate have two things in common; the Loan Officer and Real Estate Agent. Fortunately, these are the most important factors for a successful transaction. The financing side is to find a loan program that is right for you. You and your Loan Officer can discuss what your future goals are and find the loan option that is the best fit for your specific needs. The same is true on the Real Estate side. It is in your best interest to consult with your Buyer's Agent (who will represent your best interest) and your Loan Officer (who will find the right loan for you) as one side does not work very successfully without the other.  

With the interest rates as low as 5.75% (residential) and 6.0% (commercial) and lending of as much as 97%, the market is ideal for buyers of all types of Real Estate. It is amazing how the slow market is once again beginning to show some very definitive signs of rapid recovery. Buyers may be miscalculating right now by not being aggressive in finding a home now that meets their needs while the supply is there with many homes in the market. This is the best time to contact your Buyer's Agent and your Loan Officer.

6 Reasons to Own Your Own Home

Tax breaks. You may be able to deduct the interest paid on your mortgage, property taxes, some of your closing costs from your yearly income taxes and save thousands of dollars that you may invest in another project or just spend.  

Gains. Money you pay for rent is gone forever but mortgage payments let you build equity. Purchasing a home is an investment. Howard University's Joint Center for Housing Study has found that a

10% down payment + 3yr ownership = 94% return on the investment.

10% down payment + 5yr ownership = 225% return on the investment.

10% down payment + 10yr ownership = 623% return on the investment.

How? The return is based on the actual cash invested, not the total purchase price of the property.  

Savings. Building equity in your home is a ready-made savings plan. If you stay long enough and meet the requirements, when you sell, you can generally take up to $250,000 ($500,000 for a married couple) as gain without owing any federal income tax.

Predictability. Unlike rent, your mortgage payments don't go up over the years so your housing costs may actually decline as you own the home longer. However, keep in mind that property taxes and insurance costs may rise.

Freedom. The home is yours. You are the decision maker. You have the ability to remodel, decorate, paint, garden and have pets without permission. You are able to benefit from your investment for as long as you own the home.

Stability. Remaining in one neighborhood for several years gives you a chance to participate in community activities, lets you and your family establish lasting friendships, and offers your children the benefit of educational continuity.

When should you not buy a home?

  • If your rent is very low. (Usually 2/3 or less of your monthly payment).
  • You recently relocated and you are unfamiliar with the area.


 Tip : Keep your focus. Do your homework and choose a Loan Officer and a Real Estate Agent. Make a list of your needs, write them down and discuss them with your Loan Officer. Think long term and discuss it with your Loan Officer. After your finances and loan amount are clear, make a list with the most important needs for the home (garage, open floor plan, etc.) and discuss it with your DC Metro Area Real Estate Agent. Ask questions, lots of questions. They are the professionals. There is a reason for this. Contracts, Housing Laws and Loan Programs change all the time.

The biggest thing, mortgage rates and housing inventory can change daily! What your friend received last week might be totally different the following week. You basically hold your future in your hands. Once deciding what loan program that you will go with, it's up to you to keep your financial obligations in check. Meaning, save money for those small emergencies.


Loan Information has been provided by Chad Freeman, Trump Financial

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