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I've owned my home for five years, and while I enjoy owning my place and taking advantage of the yearly tax write-offs, there are definitely cons to ownership that I didn't realize until after the mortgage papers were signed.
I know couples and single people who struggle with buying vs renting. Two years ago I was the biggest cheerleader for homeownership. And as someone who created an endless (and almost mind numbing) number of mortgage and home buying articles for a publication, I considered myself a self taught know-it-all, thus worthy to give my two cents.
I uttered every cliche about renting: "don't flush money down the toilet," and "stop making your landlord rich." Looking back I realize that societal opinions shaped my thinking, and I mistakenly viewed ownership as a stamp of adulthood.
I've since modified my opinion on owning a home. And while I recognize the benefits of owning, I also acknowledge that these benefits don't necessarily outweigh the financial rewards of renting.
1. Keep Your Personal Savings. There was a time when someone with good credit and decent income could buy a house with no money down. Nowadays, you must be willing to sign over your savings account and give up your firstborn to acquire a new house – or at the very least fork over 3 to 5 percent of the purchase price. Buying a house isn't free or cheap, and getting the keys to a new place requires thousands of dollars. The bank will take ALL your money without hesitation. Sure, you gain a house out of the deal. But what's the point of owning a home if you can't afford the maintenance?
2. Avoid Additional Mortgage Costs. If you didn't research how to buy a house, then you were probably hit with a few unexpected expenses when buying your first property. These might have included an earnest money deposit, credit check fee, appraisal fee, home inspection fee, and let's not forget those awful closing costs, which cost as much as the down payment.
3. Avoid Maintenance Costs. Renters don't have to worry about broken gutters, leaking roofs, busted hot water heaters, and new HVAC systems. While homeowners pinch pennies and worry about how they're going to afford a new fence, you can sleep soundly knowing that this isn't your problem.
4. Lower Housing Costs. Once-upon-a-time the cost of rent greatly exceeded mortgage payments. This trend died when the cost of housing skyrocketed in the infamous real estate boom of 2005. Check the local real estate classifieds. You can likely rent a large, spacious house for far less than what you would pay in home loan payments. This translates into a huge monthly savings and more cash in your personal account. And while landlords do request upfront cash, such as a security deposit and a fee to process your application, it's not like getting a mortgage loan where you give a lender $10,000 of your hard-earned cash and take a vow of poverty.
Homeownership is a good thing that offers a measure of stability, as long as you remember to mail the mortgage payment. Although I praise ownership, I often wonder what life would be like if I had remained a renter. Oh, the days before broken appliances and empty savings accounts!
This has been a guest post by Valencia from Chesapeake, VA
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