Published: Monday, Feb. 4 2013 10:15 a.m. MST
Why is this "article" not clearly identified as the *advertisement* that
it truly is? I have been in financial services for 16 years, and I know a
one-sided, self-serving advice piece when I see one. Where is the discussion of
risk? As tens of millions of Americans have painfully discovered, home ownership
is not the seamless financial panacea this author promotes it to be. Extreme
caution should always be used, especially if you lack the discipline or
wherewithal (or both) to manage an above-water credit score or even the most
modest of down-payments.
To "PGVikingDad" what is the risk?If you are renting a
condo, what is the difference?Maybe on owning an actual home there
are some things that people may not understand the first time, but since when
have we based our actions on 100% known outcomes?
RedShirt, you can't be serious. "What is the risk" in taking on
hundreds of thousands of dollars in debt? "What is the risk" in being
locked into a 30-year-contract with massive financial, emotional, and social
consequences for default? "What is the risk" of owning an illiquid
security in a fluid and ever-changing employment and economic environment?
Owning is NOT the same as renting. Both have potentially similar-ish monthly
costs, but that is where the similarities end. This article treats them as
though their risks are on par. They are not.
To "RedShirt" you are not locked into a 30 year contract. If you want
out of the contract, you sell the house or pay off the loan.How is
it any different than leasing a car?How about the insecurity of
knowing that your landlords can sell the house or apartment out from under you
at any time?The risks are close. I have both rented and owned.
Just the simple fact that with owning you can sell it and recover a portion of
what you have put into is great.Also, it depends on why you are
buying. If you are buying as an investment, then you accept the risks as you
would with your retirement funds. However, if you are buying a house to make it
your home, then the financial risks are less because it is not an investment.
Why would I not be surprised to learn that buying a home is the best choice,
regardless of risk or circumstances? Advising to "buy a home" if you
are going to be in the area for such a short time as 2 years is unwise. How
long has the recession lasted from when the last housing bubble burst? (HINT: It
was well over 2 years.)Also most folks look at PITI only. (Payment,
interest, taxes, and insurance.) Don't forget the true cosrt is
PITI+MU+?MU of course is maintenance and utilities.? is
furnishings, remodeling, upgrades, landscaping, etc.See, it is going
to cost more than just the monthly payment if you want a new washer/dryer and to
change the green shag carpet. And perhaps you'll need a lawnmower, snow
blower, some flowers to plant in the spring, etc. Expect insurance taxes to go
up, too, and rising property tax is a given.
As a tenant you would still have to buy your own washer and dryer let alone
paying more in rent to cover utilities.As a renter do you own your
washer dryer and fridge? Would you expect pay more rent for a nicer apartment?
Would you expect to pay more for a fully furnished apartment?The
reality is your landlord passes these costs on the the renter. You pay for it
no matter what.
@ UtMamaSome people use a laundromat. Owning your own laundry
appliances results in a higher cost because of their cost and the convenience of
doing laundry where you live. Plus, you need to transport the laundry to/from
the laundromat.But that wasn't my point. I was trying to get
across that home ownership has hidden costs many realtors, brokers, and others
don't bother to reveal to a buyer, such as maintenance or utility costs.
Unless you ask about property taxes, don't expect to figure those into your
costs. A lady said in a public hearing they weren't concerned about
property taxes "because they are paid by our bank." (Her husband was
embarrassed for her lack of knowledge.)The difference is with owning
you build equity, or have the opportunity to do so, and with renting you build
someone else's equity, not yours. A couple bought/sold a home
in Texas a few deceades ago could have lived in a very fine hotel every night
for 18 months for less money after they sold their home and suffered a loss,
years before the real estate bubble burst.Be cautious!!
Your still paying for it. Do the Math!The hidden costs you are
talking about are the costs of day to day living. You pay for these things
anyway. It's just how you lump them together or break them down. Once you
look in to what things really cost you (like the laundry mat) you see it.
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