Why Owning Versus Renting Isn’t A Financial Consideration
Mortgage companies typically don’t highlight reasons not to buy a home. At GoldCoast we feel that the correct motivation is key to a successful homeownership experience. The “Why” behind your decision to rent a quality apartment, or buy a home or condo is a quality-of-life decision.
There are many benefits to renting such as:
- If your primary commute or lifestyle changes – renting an apartment provides the most options for a nimble solution.
- Expenses such as Taxes, Water & Sewer, Property Insurance, Landscaping, are all on your Landlord.
- Also, fixing the roof, furnace, structural repairs, major upgrades, and remodels all fall on the owner, not the tenant.
- You never have to hear loaded emotional terms that can apply to homeownership terms like, underwater, short-sale, foreclosure, deed in lieu, real estate crash, bidding war, escalation clause, mortgagee auction, upside down, points and closing costs.
- Renting has very little competition with your career, health, and relationships. Owning will draw time and expenses from “Life’s Budget” leaving you with fewer resources for more important goals.
- Think of the 1,000’s of hours you’ll save from “doing yard work”, home improvement projects, winterization, and the list goes on. And ON.
Some of the drawbacks to owning are:
- You may feel that your “success” or the American Dream is tied to owning Real Estate (it isn’t).
- People tell you Real Estate grows in value, creating equity (in fact it may actually lose value).
- “Wait, but I want to Build Equity” – This same upside also activates the potential for loss of value. In certain markets, home values can erode at a 5x to 15x pace of the principal portion of your mortgage payment. When a market swings low, you can’t keep up with a declining market via payments.
- In the early years, the Principal is roughly 1/5 of your mortgage payment (hundreds), leaving 4/5’s (Thousands) of the payment headed to the mortgage company in interest expense.
- “The market is so strong that values (in Certain Towns) cannot go down”. This is simply not true nor ever will be true.
At the end of the day, you have to decide what is best for you and your family. There are pros and cons of renting or owning your own home. We developed our Home Ownership Aptitude Score quiz to assist you in exploring which choice is right for you.
Our mortgage loan representatives love to answer questions and are available to assist you in making the decision of which option is best for you. Contact us to learn more.