Are you still renting a home or apartment for yourself or your
family?
If so, you're losing money. Think about these three ways you
lose money by renting:
1. You're paying for someone else's mortgage payment. You're
missing out on the appreciation that the property gives to the
landlord. Appreciation is a term used in accounting relating to
the increase in value of an asset, which means in real estate
terms, added value to the property. Over the past five years,
houses appreciated significantly, making many new real estate
investor multimillionaires.
2. Renters don't get to freeze their monthly housing expenses
like home buyers can. Of course, many home buyers get mortgage
payments with adjustable interest rates and their payments go up
over time. However, these payments will not go up over the long
term like rising rents. Just think about how much an apartment
costs today compared to ten years ago. A two bedroom apartment
in Lake Elsinore, California leases for $1,000 today. The exact
same apartment rented for $325 in 1996, when it was brand new.
Home buyers who had low monthly payments in 1996, who did not
refinance their mortgage, enjoy low payments and don't have to
worry about rising rents.
3. Renters don't benefit from tax advantages. Home owners get
income tax deductions. Tax deductions for interest costs, for
instance, save tax payers thousands of dollars.
Emotional Satisfaction of Home Ownership
Besides losing out on making money with real estate, renters
don't get the same satisfaction of home enjoyment that benefits
home buyers. Many landlords won't allow you to paint your walls
in colors that you desire. Also, you won't feel like fixing up
the property with custom window coverings and you get little say
in flooring materials. Because you can't make your personal
statement, you won't feel like you're HOME as much as home
owners who feel emotionally connected to their property.
How to Buy Your First Home
The biggest barrier to home ownership is often accumulating
funds for a down payment. People think they have to have
thousands of dollars for a down payment. However, if you have
good credit and a decent job, you can get a mortgage for a home
with zero down. And you can finance some of your closing costs
as well as ask the seller to help you pay a good portion of your
purchase costs. With today's mortgage finance plans, you may be
surprised to find out how much of a home you can afford with
payments similar to what you currently pay in rent.
You may have to go out of the major metropolitan areas to buy a
home. That's why so many people commute in Southern California.
Affordable housing costs much less in outlying areas. But so do
the rents. If you're renting an apartment for $2,300 in Los
Angeles, you could buy a $500,000 home in Wildomar. Our daughter
just purchased a home in December 2005 and her mortgage payment,
for a 3,000 square foot new home, costs less than $2,300. With
her tax savings, she will pay even less than renting a small
apartment closer to downtown L A.
If these amounts sound high to you, check your local area.
Perhaps your monthly rent is only $1,000 and houses cost less
than $200,000. Talk to a mortgage loan officer and see how much
of a home you can afford.
If you're renting, make one of your New Year's Resolutions to
buy your own home.
Copyright © 2006 Jeanette J. Fisher
About the author:
Jeanette Fisher offers a special report "Credit Tips for
Mortgage Financing" Find out the six mortgage requirements and
why your credit score isn't the only thing keeping you from
financing your dreams. Free Credit Help Teleseminar
http://worryfreecredit.com
