Home Ownership: Overcoming Excuses
In my previous profession as a Realtor, I was always an advocate of owning instead of renting. I heard one of three things most of the time. “I don’t want the responsibility”, “My credit isn’t good enough”, or “It’s too expensive”. All of these are great excuses to think of, but none are true. Fear has a great ability of keeping people in a box. But fear is also an acronym… False Evidence Appearing Real…Face Everything And Rise…Forget Everything And Run. How you react to fear is your choice.
In this article I will address the top three misconceptions of ownership. Hopefully, it will ease some of your fear. The mind controls the body, as we all should know. So if you think of something and believe it, chances are it becomes your reality, right? This is so relevant to these excuses. I was taught that we live in a world of infinite possibilities. So if you think these excuses are relevant, you will make them your reality.
“I don’t want the responsibility”
This is understandable and honest…to an extent. How I would put it is, the responsibility is a lot for a house; yes there are repairs, landscaping, extra utilities, homeowners insurance and alarm systems that you need. Most of it boils down to Money, Money, Money right? What about a condo or a co-op? It’s an apartment that you own. The maintenance fee that you pay includes all the things I just mentioned and they tend to be affordable when you break down the numbers. If the issue is money, I really don’t understand the mentality. Let me state some facts in the form of a question. Every year or every end of the lease, doesn’t rent increase? Unless you have a great landlord, then it most likely goes up a couple hundred dollars. Do you think a mortgage goes up? We all know about adjustable rate mortgages and why we should stay with a fixed rate mortgage, right? In case you don’t know, let me tell you. An adjustable rate mortgage is one that starts with a low-interest rate and increases over the years (something like a lease). A fixed rate mortgage, on the other hand has the same rate throughout the term. So, with a fixed rate mortgage, your payment will stay the same for 15 or 30 years. So that rent increase goes straight to profit in the landlord’s pocket.
“It’s too expensive”
I think that it’s too expensive not to be a homeowner! For the simple fact that, when you pay rent you cannot claim that as a deductible on your taxes. The interest that you pay on your home is tax-deductible and home improvements raise the value of the house. So all you do-it-yourself home improvement people who rent and take ownership of that property, everything you fix and improve, keeps that property value up, but guess who’s going to profit from the sale… The homeowner-landlord does. Well, let’s look at the bright side, at least you get the experience. Now to directly address the finance issue. Home ownership does require a down payment. Conventional is from 20%-30% down, but this is only advised for previous homeowners that are either selling their house or using the equity to make a bigger purchase. FHA only requires 3.5%-5% down. Then there are also homeownership programs that help with down payment assistance.
“My credit isn’t good enough”
Credit can be a major hurdle, BUT not a wall! There are ways to fix your credit in 3-6 months and banks are taking 620 credit scores right now with rates as low as 3.75% interest (depending on credit). Not to mention, you might run into an investor who you can talk to that may do a rent to own situation. This would give you a chance to rent the house out and when the homeowner decides to sell you get first dibs; or if discussed and agreed upon the house can be sold after the lease is up and a portion of the rent that you were paying, goes toward the down payment for your home depending on how you structure it.
As you can see, there really aren’t any good excuse for not being a homeowner. Even if you aren’t in the position to purchase a home now–house, condo or co-op–that doesn’t mean that you can’t get there. Find out where you stand now. Then figure out what you need to do to move forward with owning your own home.