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To Own or Not To Own?

January 10th, 2010 Joe Leave a comment Go to comments
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It is a big question in todays market.  Many people are continuing to rent because they fear if they buy a home it might drop in value and they will have lost thousands of dollars.  I am here to tell you that your concerns are valid and real.  Many people who bought in the last 10 years are sitting in a home that is worth half the amount they paid for it.  This is a nightmare.  So the question is To own or not to own?  First I believe that the market is starting to stabilize and within the next year is a great time to buy.  Especially if you can get in on the tax credits given out by the federal government.  I believe that the home you live in should not be looked at as an investment and here is why.

1. You need a place to live.  This cannot be argued.  Everyone needs a place to live.  Just make your home your home.  Who cares if your house is worth 10X what you paid for it.  That means all the other realestate in your market is too.  If you were going to “cash out”  you would have to move to a new, less expensive, market to really reap the rewards.

2. If you rent for “a few more years”  you always feel misplaced and like you are on the edge of leaving or moving or doing something else with your life.  It gives you a sense of uncertainty.  This can cause fractures in other areas of your life.

3. In a rental you are always throwing away the rent.  Right now your money has not gone further in years.  You can buy great houses for such great prices.   Every city in the country has amazing deals.

4. Interest rates have never been lower and they can not get much lower.  That means there is only one other place they can go.  Locking in a fixed rate right now is the best time in history!  This alone will save you thousands over the life of your mortgage.

5. Right now in many cities you can actually buy for less than you can rent because people bought rental properties with a mortgage 3,4,5,8 years ago and they have high payments.  Now those houses are worth half and they still have high payments.  Investors are rarely willing to rent a place for less than the payment.  So that means your payment to buy is going to be 30%-50% less than renting.  What if you took that extra $400-$1000 and put it in your IRA or other savings account?  Do you think after 30 years that would be a nice little chunk of change?  It would!  In fact if you saved $550 a month for 30 years with an average rate of 5% you would have about $40,000 dollars!  Thats a little incentive to buy.

6. Finally, owning a home is the American dream for a reason.  Having a place to belong and make yours is an amazing feeling.  If you are in the market for a home do not wait.  Your home is not an investment its your home.  If you are going to invest in real estate do it in some other way.

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