How about going from a renter to a buyer?


#1

I enjoyed reading all the posts of homeowners giving advice to another homeowner who is thinking of now renting.

I didn’t know so much headache went into owning a home. What things should a renter/first-time buyer think about before making the big jump into owning her own home? Is it worth in the end it if it takes up a lot of your paycheck and you are the only one paying the mortgage? Is it worth it to own in a place that is “okay” versus renting in a place you really enjoy?? Do you feel “married” to your mortgage when you own?


#2

You’ve heard some of the disadvantages of home ownership. No more nanny-living arrangements. The costs of living are directly yours rather than filtered through the landlord. (Be assured that the landlord is passing along whatever maintenance costs, property tax increases, HOA fees, utility costs, etc that he/she can in the form of rent increases.)

There are advantages to home ownership. But it does take the right kind of person. The biggest advantage is that some of the money you spend goes toward building equity in the home. (The recent downturn in housing prices is most likely what they call an ‘adjustment’ since prices in many areas were rising out of proportion to the rate of inflation. In another 10 years or so the prices will start going up again in most areas.) The thing is with real estate you have to look at the long term… like ten to fifteen years. Whatever equity you have in a home is useful collateral if you ever need to borrow money and you can use it towards the purchase of another home.

Another advantage of home ownership is that you get to write off the interest on your income taxes. Most people increase their number of deductions so that they get to take home more of their check in the short term; this helps make up the difference between mortgage amounts and rent amounts.

Another advantage of home ownership, in particular if you will be staying in the same area for a while, is that the mortgage is fixed (even adjustable mortgages have limits) while rents typically continue to increase. Obviously this may not be the case in the short term.

Single people (or marrieds where only one works) generally do not start out in the home they will live in when they have lots of kids and pets. They typically start out in a small one or two bedroom home or condo with low HOA fees and then trade up at some point. This means they are not paying for more house than they need and with a smaller home there is less to maintain. A lot of singles rent an extra room to help out with costs. (This works best when there are multiple bathrooms.)

Yes, there are plenty of things to consider before buying a home. And the advantages versus the disadvantages vary from place to place depending on such things as desirability of the area as a place to live, rent control, amount of land available for new building, property tax controls, local customs/rules about what utilities landlords pay for and what tenants pay for, the local difference between rents and mortgage payments, etc.

Before buying a home in any area it’s a good idea to check out all of the above. In some places and/or at certain times the difference between the monthly payment for buying a house is not that much greater than the rent for such a property. At other times the mortgage costs are much higher.

One thing my husband likes to point out is than when you do buy a home after renting, you usually get a nice bonus deposit back when you move out of your rental to help cover any of the initial move-in expenses with the new home. Your first mortgage payment is often included in the closing costs when you purchased the home so you have a month to go before you have to actually write that first mortgage check. (Obviously you had to come up with a LOT of money in the first place when you bought the home.)


#3

There can be headaches. But, there are many joys too.

I highly recommend the book 100 Questions Every First Time Homeowner Should Ask by Ilyce Glink. My dad gave it to me when I decided to buy a townhouse.

That is a question only you can answer. “Worth it” is in the eye of the beholder. The best advice I ever got was that you need to look at your home as a lifestyle choice, not an “investment.” It certainly may turn out to be an investment, appreciate, etc, but that is NOT why you should buy a home to live in.

IMHO, it is very “worth it.” I loved having my own place.

That again totally depends on you. If you are going to have regrets or second thoughts, don’t buy it.

No, because I live WAY below my income and I would never buy a house at a price that a banker told me I could afford. I bought a house significantly LESS than that.


#4

IMO, this is a terrible way to look at things. If you don’t feel quite ready to own yet, the smart thing to do is scrounge up a roomate and rent the cheapest apartment you can tolerate. THIS is how you save up the money to buy a HOME you really enjoy.

Luxury apartments are not for the financially savvy. (IMO)


#5

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