Buying a house isn’t for everyone.

The truth is, it’s kind of a pain in the you-know-what to be a homeowner sometimes. If the power goes out, it’s on you bro, better get a generator. If a window breaks, sorry dude, figure it out.

Even though there are some big responsibilities that come with owning a home, there are some excellent advantages worth mentioning!

 

Your payment goes toward something.

Yup, it’s called a mortgage. Every month you pay that sucker, the balance of that home loan goes down (just a bit at first). The only time that isn’t true is if you have an interest only mortgage (not a ton of those still out there), where your payment only goes toward interest for the first X number of years. But for the majority of people, their house payment goes toward building equity and paying that bad-boy down.

The alternative? Pay rent (aka pay someone else’s mortgage for them). This leaves you with a lease agreement that you have to stick with, in a house you really can’t change to your liking. The result? You despise writing that rent check every month because you know that even if you did stay there for 30 years, you would still have next month’s payment due on the 1st. Keep in mind, rent typically increases every year. So not only would you be paying someone’s mortgage for them, but when it’s all said and done you’ll be paying a higher payment on something that has no liability attached to it. I know, I know, most people don’t rent in the same house or apartment for 30 years. But whether it’s 30 years or 3 years, do you really want your hard-earned money going into someones pocket and have nothing to show for it after 3 years?

I hear the chirping already… “Adam, not all homeowners have equity after a few years of owning. Heck, some were underwater on their homes in 2009 and they made mortgage payments for 10 years before that.”

Yes, you’re right. I am aware of that. Don’t forget, many people put themselves in that place because they used their home like an ATM. Taking cash out of their home to buy a shiny car, or to keep up with the Joneses. I agree with you… if you continue to cash in your equity, you won’t have any equity to speak of. Yes there were other factors that played into the housing crisis like people getting approved for loans they can’t afford, appraisers trying to meet the needs of lenders, and straight-up fraud. But the mid-to-late 2000’s housing bubble was an exception to the rule. Historically, housing prices move steadily (but reasonably) upward.

 

Increased sense of pride.

Yes, too much pride can be a bad thing, but being a homeowner is confidence builder. The thought and preparation it takes to buy a home requires a lot of guts and strategy.

Think about it… You are sitting in your apartment. Channel surfing. You “accidentally” leave it on HGTV while you reply to a few text messages. “Property Virgins” is on, and buying a house looks fun. You suddenly decide that you are capable of buying a home. You Google: How to buy a home. You find a blog that talks about home ownership, and now you’re feeling super geeked. You call a local Realtor, and she asks you if you’re pre-approved for a mortgage. “Pre-approved?. Umm not yet.” Your Realtor insists that you get pre-approved first, and get your ducks in a row.

You ask your friends and family who to call for a mortgage. The next thing you know you’re gathering up your financial identity and giving it to your mortgage guy. You find out there are a couple of things to work on, and it’s probably going to be about 6 months until it’s time to start looking for a home.

You spend the next six months getting your finances squared away, and following your loan officer’s guidance to a T.

• Paying down your credit cards.
• Making no large (unverifiable) deposits into your bank account.
• Get a couple small collections deleted from your credit report.
• Now you’re ready.

Your Realtor finds you a sick deal, and you make an offer. You negotiate a price that is a win/win for everyone as long as the seller is willing to do a few repairs that the inspector noted. You give your earnest money deposit. It’s game on. Appraisal is ordered. Thirty-ish days later you bring a crisp cashier’s check to closing for the rest of the funds needed. This was pretty much all of your savings, but you saved for this exact moment! To own your home! Now you have the keys, and you feel like you can sit at the big kids table at Thanksgiving this year.

It all started with a little channel surfing mixed with a dose of inspiration.

 

Get more for your money.

In Brighton, MI and most of Michigan (if not all) you get more bang for your buck by owning your home instead of renting. Let’s look at a quick example. Here is an actual “for rent” listing on Craigslist right now:

$750 / 2br – 775ft² – 2 BR Condo (Brighton)

Great Location. Beautiful updated 2 BR Condo in Hidden Harbour Condominiums opposite Meijer store in downtown Brighton. Central A/C, appliances, washer dryer in the building. No pets please. Water, hot water, trash pick up, Snow removal included in the rent. Available Dec. 1, 2014. Walk to shopping and near x-ways.

Here is an example “for sale” listing on Craigslist right now:

$59900 / 2br – 950ft² – TOWNHOUSE for Sale in Brighton

2 Bedroom, 1.5 bath END unit offers extra windows and light, along with added outdoor living space. New Pergo flooring in kitchen and dining areas, also includes newer stove and frig. Newer windows throughout. Large Master Bedroom (16 x 12), and 2nd bedroom (11.5 x 10) both have mirrored closet doors, ceiling fans and lots of light. Finished basement with new glass block windows has built-in storage areas, along with a large separate laundry room. Neutral colors throughout home. Back door leads to private covered patio area, surrounded by green space & trees. Outside area is large enough to entertain and garden.

Running rough numbers on the second one, it looks like $596 including principal/interest/taxes/insurance/mortgage insurance/homeowners association dues

So for 125 more square feet of living space, you pay $154 less per month.

I pulled that up with a few mouse clicks, there are never-ending examples of this.

 

Ability to make a house a home.

Take the above for rent listing for example. “No pets please.” It didn’t say no dogs over 30 lbs. It didn’t say no pit bulls. It didn’t say no snakes. It said NO PETS.

Why are there so many restrictions on renting? Well, consider this for a moment. If you owned a home, and rented it out, would you want to give the tenant (renter) the ability to do whatever they wish with the property? No? Why? Because you never know how bad they will trash the home. Resulting in you (the owner) having to renovate the property once the tenant moves out. Who knows how much that will cost? Who knows how bad their 1-year-old boxer tear up the carpet? Well ultimately the owner will have to deal with it. So it’s in the owners best interest to be selective on what will be considered when renting out their property.

When you own your home… you decide. You decide on upgrades, pets, colors, etc. You get to make it yours.

 

Tax deduction.

The tax deduction that you get from paying mortgage interest is in many cases the largest tax deduction for many homeowners. Unlike credit card and car loan interest that you pay, the mortgage interest that you pay is tax-deductible. Even wealthy borrowers who could pay off their mortgage 3 times over with their assets keep their mortgage because of the tax deduction that it brings.

This is a huge benefit for people who look to consolidate some credit card debt because not only does their overall monthly budget improve, but the interest that they pay results in a larger tax deduction. As I mentioned in the first advantage at the beginning, it’s not wise to use your home like an ATM, and take cash out multiple times just to buy stuff. But if you look at it from a common sense standpoint, many times consolidating debt into your mortgage makes good financial sense. If you find yourself refinancing every couple of years in order to consolidate your credit card debt, there is an issue. Might want to chop those cards up so that you don’t find yourself in the same position over and over.

This might be a helpful resource to answer some questions surrounding your possible tax deduction.

What do you think?

Across the United States it is more cost-effective to own than rent in suburban areas. Do you agree? Leave a comment below and tell share your thoughts.

Adam Lesner | Brighton, MI | Mortgage Loan Officer – NMLS 198818