The Great Advantages And Benefits Of Home Ownership Versus Renting
This BLOG On The Advantages And Benefits Of Home Ownership Versus Renting Was Written By Gustan Cho NMLS 873293
Why rent when you can own.
- There are great advantages and benefits of home ownership versus being a renter.
- There are many instances and cases where home ownership is cheaper than being a renter.
- Many landlords will ask you for two months security deposit where in many cases, the security deposit is more than the down payment required for a home purchase.
- Down Payment and Closing Costs?
- There are down payment requirements on a home purchase but if you are renting, you need to come up with security deposit as well.
- FHA requires 3.5% down payment and Conventional Loans require 3% down payment for first time home buyers and 5% down payment for seasoned home buyers.
- VA Loans and USDA Loans do not have any down payment requirement and offer 100% financing.
- Yes, there are closing costs on a home purchase but the thing many first time home buyers do not realize is that the closing costs can be paid by getting a sellers concession towards a buyer’s closing costs and if the seller is not willing to give a sellers concession, then the mortgage lender can cover all or most of the closing costs by a lenders credit for a slightly higher rate.
- There are many advantages of home ownership as well such as the potential of the home increasing in value and the ability to deduct your mortgage interest from your income taxes.
- A homeowner does not need permission from their landlord if they need to get a dog, cat, or other pet.
- A homeowner does not need permission from their landlord to decorate their home or plant a vegetable garden.
- A homeowner does not need to worry about their landlord not renewing their lease and needing to move out.
- Then why doesn’t every renter become a homeowner?
Cost Of Homeownership
Like with everything else in life, there is nothing for free and if something is too good to be true, it most likely is. There are cost of home ownership.
- A homeowner cannot rely on someone to fix repairs if something goes wrong.
- If there is a clogged toilet or clogged sink, the homeowner needs to contact a plumber.
- A simple house call from a plumber can cost $200 or more.
- If a homeowner has a well and septic system, a well replacement or major well repair can cost upwards of $10,000 or more.
- Many homeowners in Florida have their air conditioning units running at full blast during the summer months and a service call to an air conditioning specialist can cost a minimum of $500 or more.
- Homeowners who own a single family home will most likely have to mow their own lawn and do their own landscaping unless they contract a landscaping service or their homeowners association covers it.
- A homeowner doing their own landscaping will need to purchase a mower, weed wacker, and other landscape equipment.
- The cost of purchasing these equipment is not the only cost involved.
- These are machines and they need servicing and often times may break down one or more times per season.
- For example, I own a riding mow tractor and just had to spend $295.00 because the belt broke.
- The belt itself was $95.00 from John Deere and the service call and labor was $200.00.
- If you live in the northern region of the country where there are harsh winters, a breakdown on your furnace can cost you hundreds of dollars.
- Frozen pipes can cost hundreds of dollars as well.
- If you have a long driveway, snow plowing companies will probably charge $100.00 per service.
- If you are moving from a small apartment to a home, you need to consider how much more in utilities you are going to pay.
- Most renters do not pay for water and sewer service.
- Water and sewer bills can be quite costly and utilities are not calculated by mortgage underwriters in calculating your debt to income ratios.
- Also, your electric and gas bills can easily double if you are renting an apartment and your new home purchase is a larger home.
- These are things first time home buyers need to consider when they plan on buying a home.
Reserves And Budgeting
If you are a first time home buyer, you need to consider the cost of home ownership. Home ownership has many advantages but also require responsible budget planning and having reserves. Insurance companies do not cover repairs and neither do mortgage lenders. You are on your own. First time home buyers also need to keep in mind that property taxes and homeowners association dues can increase which can really cause a financial hardship on the homeowner. Bottom line is that first time home buyers should be conservative when purchasing their own home and realize the cost of home ownership. You may not want to get took much of a house and be able to go to sleep at night.