Misconceptions of First-Time Homebuyers

Misconceptions of First-Time Homebuyers

Realty Biz News writes about misconceptions of first-time homebuyers. The number one misconception:

Misconceptions of First-Time Homebuyers

It’s cheaper to rent than own. This may be true if you’re planning to rent for a short period of time. But, if you’re planning to rent for several years, you might be better off purchasing a home. A fixed-rate mortgage is stable for 15 to 30 years, but rents may increase on average by as much as 5% per year.

Money spent on a mortgage each month is building equity in your pocket rather than the landlords. Something you’ll eventually own is a foundational means to growing wealth. Consider using a rent vs. buy calculator to run the numbers and see if owning makes better financial sense for you in your area.

The Reasons for Buying:

  • The biggest reason is equity build. Equity equals the home’s value minus mortgage debt. Mortgage payments go to the bank and you gradually pay down the mortgage.
  • Landlords generally raise rents, especially if the market for rentals is tight as it is now. If you are already paying a third or more of your income for rent, meeting the rent can get tougher. A mortgage payment is fixed for 30 years.
  • A symptom of inflation is housing going up in price over time. Many cities, across the country, are experiencing increases each year. A seven percent increase in the value of your house each year doubles the price in 10 years and increases your equity.
  • Rental payments are not tax-deductible. The interest paid on a mortgage is deductible on your tax return. You can look at it as Uncle Sam helping you buy your house.
  • Creative control – you want to paint a wall purple, tear out a wall, hang every picture you have, no problem. You don’t have to get permission. You also don’t hear foot traffic from a tenant up above you or a stereo blasting.
  • A house is your castle, your rock. Ownership is stability. A house is private property and for the most part, we still protect private property rights.
  • Think of school. If you have young children, owning a home lets you give the children the stability of staying in the same school district for an extended period. I ought to know. This writer lived in six houses while in grade school.

And for Renting

  • Flexibility – if you don’t know how long you will stay in a particular area, renting works well
  • Career stability – many young people seem to change jobs frequently, renting works well
  • Credit – is either poor or not well established. The good news here for renters is that on-time rental payments can establish credit.
  • Income instability – It is hard to make a long-term commitment to a house when you have worries about a stable income.
  • No maintenance expenses – when something breaks, just call the landlord. Maintenance can add significantly to the cost of home ownership.
  • No down payment – except for the usual first and last monthly pent and a security deposit.
  • You may be able to rent an apartment with all the amenities you desire like a pool, gym, social meeting area, and conference facilities.
  • Richard Green, a professor at the University of Southern California, Los Angeles said, “Housing can be more volatile than you think.”

FREE information on How to sell your house fast

Styl Properties, Inc. is here to help homeowners out of any distressed situation.  

As investors, we are in business to make a modest profit on any deal. However, we can help homeowners out of any situation, no matter what!  There are no fees, upfront costs, commissions, or anything else.  Instead, we offer the simple truth about your home and how we can help you sell it fast.

Give us a ring. We would love to help you understand the process and answer all of your questions. You can reach us at 402 999.0577

Photo by Pierre Bamin on Unsplash

Leave a Reply

Your email address will not be published. Required fields are marked *