Better to Rent or Own a Home?

Many people purchase homes that tie them to all of the responsibilities that come along with homeownership.  Renting a home allows you the freedom to pay a monthly rental fee and not have to worry about other maintenance problems that the owner needs to keep up with.  However, owning a home allows you more freedom in choosing what to do with the house and property and is a solid real estate investment.  The question many potential home buyers ask is: Which is better, renting or owning?  The answer to this question depends on your specific lifestyle choices and situation.

For those of you who are currently renting and considering buying, but want to know what you are getting yourselves into here are some things to consider before you take the plunge and purchase a home:

•    Owning a home means you are responsible for all of the general maintenance for that home and the surrounding property.  You have to mow the grass, clean out the gutters, trim the hedges, remove any debris in your yard like tree limbs and leaves in the Fall, plow the snow out of the driveway, and more.
•    You are also responsible for the appliance maintenance or replacement in your home.  Appliances like your stove, refrigerator, dishwasher, furnace, hot water heater, water softener, and more.  If these items stop working or need replaced it can be a large unexpected cost to you.
•    Routine maintenance can also be extremely costly.  If you have a septic system it is suggested that you have it pumped out every two years, your water softener needs to be kept full of salt, the furnace filter needs routinely changed, and other regular costs that can add up to a lot of money in the long run.
•    Any large problem with the home, like roofing problems, plumbing problems, electrical problems, well problems, and sewage problems can be extremely expensive to fix or replace.
•    The upkeep of the home such as painting, landscaping, interior decorating, and remodeling can also be costly.
•    Property taxes are a necessary cost to any homeowner.  The cost of these taxes depends on the assessed value of your home and need to be paid on time twice a year or a lien could be put on your home for not paying these necessary taxes.
•    Home owners insurance is another necessary cost.  Your lender may also require you to have mortgage insurance which can be costly.

Some of the more positive aspects to owning your own home include:

•    It is a great investment.  You are putting a lot of money into your home when you pay your mortgage every month and it is money saved for you and your family as equity builds in the home.
•    You are not paying rent for someone else’s home.  The money you pay in rent goes towards paying your landlord’s mortgage which benefits his financial situation instead of yours.  When you purchase a house your mortgage payment goes towards your future wealth.
•    You can decorate the home the way you want.  Remodel it, paint it, change it in any way because it is yours.
•     Your mortgage interest is tax deductible.  At the end of the year you should get a statement from your lender with the amount of mortgage interest you paid that year which is a tax deduction and can save you money on your federal income taxes.
•    The security that comes with owning your own home.  If you rent you can be evicted if the landlord decides to sell the home, but if you own your own home you can settle in and feel secure in your location.

So when considering if you should purchase a home you should really look at your own personal lifestyle to help you make that decision.  If you are gone a lot and like the freedom to do what you want without a lot of responsibilities then you should consider continuing renting unless you can afford to pay someone to help with the upkeep the homeownership requires.  If you are a home body who likes to keep busy around the house then maybe purchasing a home is a great idea for you.  Think about what you value in the way of time and money and then make an informed decision that reflects your priorities and goals in life.

June is National Homeownership Month

June is National Homeownership Month and HUD and the FHA have planned a month filled with activities across the country. The theme this year is “Promoting and Protecting Homeownership,” which strongly emphasizes consumer education about loans and the lending process. Here are a few of the events taking place across the nation:

• Native American Housing & Homeownership Fair in Portland, Oregon
• Homeownership Community Party in Aiken, South Carolina
• Atlantic City Housing Authority Housing Symposium in Atlantic City, New Jersey
• Homebuyer Fair in Jonesboro, Arkansas
• Basic FHA Continuing Education Class in Las Vegas, Nevada
• Foreclosure Prevention Conference in Houston, Texas

Visit the HUD website to find events in your area!

Home Ownership Accelerator Program

Home owners interested in paying off their mortgages as seamlessly and quickly as possible might want to consider one of the newest trends in the industry — a mortgage that basically doubles as a checking account.

A California-based mortgage firm has pioneered a program called the Home Ownership Accelerator. Financial experts at CMB Financial Services created a method of making principal payments that combines a traditional mortgage with the basic tenets of a checking account at your local bank.

Here’s a snapshot of how it works: Instead of writing a check for the mortgage each month, homeowners deposit their entire paychecks, as well as all other sources of income they receive, into their mortgage, completely bypassing a checking account. Those deposits eat away at the remaining principal on the mortgage, while interest is calculated at the end of each month based on the amount remaining on the loan.

Meanwhile, homeowners can access that mortgage throughout the month like any checking account, either by writing checks or using an ATM card. Withdrawals, of course, pull money back out of the principal payments made each week or month.

The loan pays off faster than a traditional mortgage because with a lower average balance, there is less interest charged and therefore more of the person’s income can stay in the mortgage in the form of principal, ” Doug Nesbit, a vice president with CMG, told The San Francisco Chronicle recently.

The company says the loan is “is ideally suited for homeowners with a stable salary, good credit and financial discipline.” In other words, it’s geared more toward people who can afford to sink their salaries into this type of fund. Those living more paycheck to paycheck should probably look elsewhere.

Mortgage Loan Place is here to help you make sense of the mortgage world and find options that fit your needs and lifestyle.