In 2008, the real estate market crashed with an almighty thud and many found themselves homeless. Many of those former homeowners swore off homeownership and who can blame them? But, were those who were renters any better off? If you couldn’t pay your housing expense or worse yet, your landlord was foreclosed on, it still left you fending for shelter, right?
What was the take away for America? Perhaps it was that your home is four walls and a roof that give you and your family shelter and a place to connect. Next to food and clothing, this is a primary need.
So what went wrong?
Was it the constant borrowing against the equity for the frivolous?
Was it simply buying more than was really affordable?
Was it just not having a rainy day fund?
Maybe just too much crisis at once with income losses. If you are a renter, there are advantages. Theoretically, when something goes wrong like a leaky roof, a broken pipe, a fried circuit breaker or a rotten deck, it is someone else’s responsibility to fix it and it’s your job to whine about it until they do something. Or you can fix it and try to charge it back against your rent. How many of these episodes leave you feeling like a kid always waiting for someone else to solve the problem that you have to live with?
Then there is the matter of the guarantee that your rent will go up. Some folks got caught when the values went up and found themselves without a place they could afford as the rents skyrocketed. No fun! When you pay rent – you are paying your landlord’s mortgage and rewarding them for being a smart enough saver to purchase an investment. Your rent is also not recouped in any way – it’s just gone.
Owning a home means you do have to be the grown up that handles the repairs. But you are one so no big deal, right? It also means that you become that smart saver gaining equity each month and getting a tax break from what you pay out. You can look forward to only increases in property taxes that are also write-off and no more constant rent increases. The beauty of what happens over time is that while the rents around you increase, your payment will be stable and before you know it your payment will be small compared to rent. Hopefully your income grows as well and then you get to be that smart saver that saves enough to invest in something or to add an ADU to your house that you can rent out.
Think about it. What do you want? Are you happy letting someone else be in charge of when things get repaired or shelling out your hard earned funds with no return or would you like to drive that part of life? It’s available to anyone who wants to do the work to get there. For some this will be easier than others but EVERYONE with a stable income has the opportunity to do this, even if you are disabled. If you haven’t owned a home in three years, this makes you eligible for many of the first time homebuyer programs. In next week’s post I will talk about what it takes to plan for the transition to homeownership from being a renter and how to formulate a plan.
If you are thinking about this, please email me or give me a call. I would love to hear what you are thinking about and answer your questions as you make your plan. If you’re ready to make an application we can do it by phone or if you prefer to just do it online, click the button on the front page for a secure portal.
Have helped buyers of all types and financial levels and worked on 1000's of loans.
There is always something new!
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