As June is National Homeownership Month, we are doing a series of blog posts relating to home ownership. Each will have a different perspective, so stay tuned for more.
First, full disclosure. I teach our homebuyer education course. I have my real estate license. Even though my license is inactive, I am still involved in our local real estate association. I even teach the classes required to get your real estate license. Am I invested in that world? Yes.
I’ve been both a renter and home-owner. I currently own my own home and would have it no other way.
I am a big fan of home ownership. It is no secret.
I’ll also be the first one to tell you that home ownership is NOT for everyone.
Are you renting and considering that big purchase? Perhaps you are already a home owner and are wondering if you made the right choice. There are a few things to think through as you decide whether or not you should be a home owner. I’ll walk you through some of those.
Is building equity a priority for you?
When you make your rent payment, you are, in effect, paying the mortgage for your landlord. When you move out, you get some of your deposit back. Maybe. But when you make a payment on your mortgage, a portion of that payment is going towards paying down your debt. The more you have paid down when you sell, the more you get back from the sale price. And then there is appreciation, or the increase in value based on the housing market. Now that’s no guarantee, but it’s not that different from trusting the stock market.
Do you want to be able to move quickly or often?
Aside from the time and effort it takes to sell a home, there are also costs associated with the process. If you haven’t been in the home long enough to build enough equity through your regular payments, you may end up paying to sell your home. That’s not good. If quick mobility is your thing, buying a home may not be your thing. But keep in mind that renting usually comes with a lease that will require you to pay (even if you don’t stay) for up to a year. Go month-to-month and you can be moving in a matter of days.
Where do you find freedom?
Don’t like lawn care? Snow removal? General home maintenance? Let the landlord do it. After all, that’s part of what you are paying for in your rent. Want to paint the walls anything but white? Dig up the yard for a garden? Have more than a wall between you and your neighbors? Then perhaps buying a home is where you will find your freedom. But with those freedoms come the responsibilities of mowing, shoveling, and fixing. If you are a glutton for punishment like me, you may find you actually enjoy those things.
Are you really ready?
In the real estate world, we use the phrase “ready, willing, and able”. Many people who want to buy a home are perfectly willing to do so. They are ‘super stoked’ about it. Except they just signed a one-year lease, or just started their own business, or have a ton of credit card debt. Perhaps they have the funds, but are still recovering from the years of abuse they laid upon their credit score. Looking at the bigger picture (as the mortgage lenders certainly will), are you ready, AND willing, AND able?
Are you on the same page?
For many home buyers buying isn’t a solo project, but rather a team effort. Does your significant other really want to buy a home as bad as you? Do they have the same definition for ‘home’ as you? Have you even discussed it? If you are going to do this together, you need to be headed in the same direction. Otherwise, it could well end up the dream home for one of you and a prison for the other. There will probably be some compromise for both of you. But at least you will be there together.
There are certainly a lot of other things out there to consider. I hope this is at least a place to get you started thinking about it. Whether you decide to buy or rent, I just want to make sure that that is an informed decision for you rather than strictly an emotional one.
If you would like to know more about the home buying process, the Center for Financial Resources offers regular Homebuyer Express classes. Attend in person or via video conference and we will provide a lot of information to help you make the best choice for yourself regarding a home. You can find out more about the class on our website. If class times don’t work, call us at 606-330-2700 to discuss other options.
written by Breck Miller
images courtesy freedigitalphotos.net