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Homeownership and Apprehension

by Sharon M. Garcia

Purchasing a home can be a daunting process, especially for new buyers. Battling doubt is part of that process (in many cases, the biggest hurtle to overcome). Many work to reconcile their financial abilities and struggle to calculate whether they can afford to purchase a home. In many cases, even when the numbers justify the answer, there is reluctance out of aversion to change. Countless variables are thrown in and the final choice sometimes has to be made: IN or OUT?

Besides the necessary calculations, there is no other step that one can take to arrive at a “comfortable” answer. However, to help those undergoing this process, here are a few facts that may sway the decision towards the Yay instead of the Nay:

  • The homeownership rate in the U.S. is nearly 66% according to the U.S. Census Bureau News.
  • Banks are offering the lowest rates ever.
  • The market collapse has made owning a house as or even more affordable than renting.
  • Those who purchase continue to benefit from being a homeowner by taking advantage of the tax savings, of which deducting the interest paid on your mortgage is a part of.
  • Purchasing when the market is low (NOW) will eventually build equity.  However, one will need to wait until the market has stabilized in order to building equity. This may not be a quick wait, as it might take 5 to 7 years to see an increase in equity at the current pace.
  • If your mortgage rate is a 30 year fixed, monthly payments will remain the same. Renting renders one susceptible to yearly or more often rent increases.
  • Homeownership allows for true accommodation. Don’t like the color? Change it. Want new amenities? Upgrade. There are no landlords to ask for permission.
  • Being a homeowner motivates one to get involved by working with neighbors for a better community and schools.

While the list above looks great, not everything goes right every time. There are some serious consequences of purchasing when one is not able to or out of compulsion. Again, having the financial numbers in order is great, but not the only indicator one should consider. Although the list is smaller, here are some cons associated with homeownership:

  • Keep up with the maintenance of the property. It takes work and money to keep a property in good condition!
  • There are no more landlords to call to arrange fixes. This means getting familiar with fixing things or paying others to do this for you.
  • Ties up your cash.
  • There is no guarantee the property will increase in value (equity) due to market conditions. Patience is required. Property values can and may continue to decrease for the next few years.
  • You are obligated to your monthly mortgage. Falling behind can have extremely negative consequences on your credit, even more so than falling behind on rent.

We at the Long Beach Realty Team can help you with the decision making process. Of course the final decision will always be up to you, but our expertise can help you see the fields of opportunity lying beyond the fence of apprehension. Our honest assessment of your purchasing ability and our market research will help you see what you are capable of purchasing or, if the time is not right, let you make the right decision for you. Are you sitting on the fence of homeownership?