When Is the Right Time To Buy A Home?

Someday, my 27-year-old daughter would like to own her own home. But right now, she’s happy sharing a rented townhouse with a friend. She says, “I am trying to make sure I can afford it before making that leap”. “I don’t want to be house poor.” 

There’s no question that owning a home is a desirable goal, and low interest rates in recent years have made it possible for millions of Americans to buy their first houses, invest in income property or trade up to a larger home. For many others, though, there are good reasons to continue to rent. You really need to assess your overall expenditures, not just your housing expenditures, and ask yourself if you really can afford to buy.

Home buying is not for everyone and certainly not for everyone at every point in their lives. For young people like my daughter, it’s not a bad strategy to get one’s financial life in order before taking on the kind of debt required to buy even a modest condominium or starter house. My daughter, who works at a local hospital, said she is focusing on paying off her college debt, then will turn her attention to accumulating money for a down payment on a house. She said that she’s wary of moving too fast because she’s seen friends struggle when they were financially unprepared to buy.

“Some have had trouble keeping up with their mortgage payments,” she said. “Or a condo association will raise fees and they can’t afford their place anymore. Home prices are still so high and rents are so low that many find it advantageous to rent. “But, of course, renters are missing out on the appreciation of a home,” she said. “There are renters who say they could put money aside, invest it smart and get that kind of appreciation — but most people don’t do that.”

There are also times when it doesn’t make sense to own. We see older people who have large houses that they’re selling. In some cases, given their age and lifestyle, it doesn’t pay to for them to buy a smaller house. But buying can also be a problem for young people who think they’ll have to move frequently for their jobs.

Residential real estate has relatively huge transaction costs like brokers’ fees, closing costs, registration fees and other expenses associated with the purchase of a home. To buy and later resell, figure it at about 15 percent of the home’s value. That’s huge, and it means you have to stay put, ideally for at least five years, to recoup that 15 percent.”

The key to making the move from renting to buying is cash flow. People need to make sure they have the money not only for the mortgage but for other expenses that come with ownership including real estate taxes, insurance, and repair and maintenance costs.

Most people need to buy property at some point in their lives. It gives you your own little piece of the American dream,it’s something that’s all yours. And, from a financial point of view, it’s also a good long-term investment. It’s an appreciating asset that will behave very differently from stocks and bonds, especially over a 30-year window.

Mobile Home Becomes Vacation Home Becomes Retirement Home

Image via WikipediaNear my home there are many mobile home parks filled with retiree's. It's a great place to live because the weather is great most of the time and it's a ten minute drive to the beach. Many people chose manufactured homes because of the lower costs when compared to apartments, condos, homes, and townhouses.

Friends from Illinois come down to visit us often and they stay in their manufactured home. Whenever they visited they had to pay for a hotel. Over the years spending money on a place to stay got pretty expensive. Through the grapevine we learned about a manufactured home nearby that was being sold. We went over to take a look at it and recommended it to our friends. They fell in love with it, the rest is history. For them it works out great because they save on hotel and restaurant expenses allowing them to stay with us longer. When they finally get around to retiring they will sell their Illinois home and move permanently here.

Manufactured homes are often overlooked as an answer to the affordable housing problems we have in the country. An idea like this would work out for newlyweds, students,and people just starting out in the work force. It would save them a lot of money over more expensive alternatives like apartment rentals. It's something to look into.

What's A Construction Loan and How Does it Work?

Image via WikipediaConstruction loans can sometimes seem confusing to the first time, do it yourself home builder. But in reality they are a simple tool for borrowing the money to build a home. A construction loan is a simple loan used to finance the construction of a home. When the home is completed the loan is due. So a mortgage loan must already be set up and take affect at that time. Traditionally, you apply for both loans at the same time and it's a good idea to lock down the mortgage interest rate at this time.

At the beginning of home construction, the borrowed money from the construction loan is placed in a bank account and checks are written, drawing on this money. You only pay interest to the bank on the money used. You do not pay principle, that happens when it converts to a mortgage, after the home is built.

Just as there are different kind of mortgages, there are variety of construction loans with different variables.

• Construction loans are short term loans that can last between 6 months and 2 years depending on terms from your lender.
• Some loans are construction only or construction to mortgage loan.
• The credit score of the borrower determines the amount of funds that the banks will lend, it's not open ended.
• Construction loans are usually variable-rate loans priced at a spread to the prime rate or some other short-term interest rate.

The construction loan funds are dispersed on a predetermined schedule or upon stages of completion. According to completion and inspections more money is released. At the end of construction a certificate of occupancy is issued by the municipality allowing occupancy of the home. This triggers the end of the construction loan.

5 Costs Homeowners Pay That Renters Don't

Image by GreyArea via FlickrThe debate over Renting vs. Home Ownership goes on. The common advice is "Don't waste your money on rent, invest in a House." With the many costs of home ownership, renting is starting to look a lot better. Lets start with the down payment. Renters don't have to pay that big up front expense. The home owner has the pleasure to also have a nice mortgage payment to make every month for thirty years. That's quite a long lease. Plus if home owners don't pay they get foreclosed on, renters are just evicted.

Property Taxes

These are the taxes paid to your local and state governments for salaries and services of government. It's a never ending expense that just goes up as the value of your home appreciates. They vary according to region. Looking at the property taxes for the home is important when your purchasing. Sometimes living in a different county can sometimes lower your taxes because of differing assessments.

Home Maintenance.
Renters are lucky because when the water heater breaks they just have to call their friendly landlord to fix it free. The home owner has to go through the expense of buying and paying to install a new one. Maintenance is a big factor in home ownership. The rule of thumb is to set aside 1% of your homes value for yearly repairs. On a $200,000 home, you will need $2,000 per year. I believe this is a low figure. I would estimate that 4% is the necessary amount needed for home maintenance, at least $8,000 per year for a $200,000 home.

Mortgage Interest.
Again renters win. Over the duration of a 30 year $200,000 mortgage at 5%, the home owner gets the privilege of paying over $200,000 in interest. The amount of interest depends on your interest rate and your duration of the loan. The benefit of paying interest is home owners receive a mortgage interest deduction on their tax return to ease the pain a little.

Homeowners Insurance.
Renters don't have to pay this expense, but they should carry renters insurance. Renters insurance covers the contents of the apartment. Home Insurance covers the structure itself and sometimes the mortgage payoff amount. If your home is lost to fire, flood or other disaster home owners insurance comes in to save the day and puts everything right again. Homeowners should yearly check their policies to see if they have replacement cost on their insurance, not just current value. The average insurance is $950. But if your living in a hurricane, tornado, or flood plane your insurance can be substantially higher.

Real Estate and Legal Fees.
When you rent you just leave a deposit and first months rent and you then get the keys. A home owner has to pay real estate agent fees, lawyer fees, title transfer fees, and closing costs when purchasing and selling a home, renters don't have any of these expenses.

It's understood that landlords pass on these fees to their tenants who rent. Yet landlords get the profit that comes when a home is sold. Even though a mortgage payment can be lower than a rental amount, many other things go into the finances of home ownership.

How To Avoid The Dreaded 6% Real Estate Commission

Image via WikipediaThe prices of homes may rise and fall, and housing bubbles may grow and and bust, but one little number continues to live on, the 6 percent real estate commission.

I grew up in the real estate and home building business and I have heard many, many times the irritation the 6% commission can cause. I would hear my father and grandfather complain every time they had to pay this fee. Whether the home sold for $25,000 or $250,000, it didn't matter.

It's a lot of money to pay for a service when margins can be very slim. Over the years there has been many negotiations, with brokers, to try and get it lowered. Some agents remain firm in their belief that the 6% commission is fair and well earned compensation for providing a necessary service. Real Estate offices have expenses and overhead. They pay for promotion and advertising. The legwork, phone calls, paper work, and negotiations use up a lot of time and money. Still, there are alternatives.

• Before settling in on an agent ask if they will accept a lower commission, maybe 3 or 4 percent. Even a reduction to 5% would save you a lot of money.
• If the buyer does not have an agent, your selling agent does not have to split the commission, so they may be more inclined to reduce their commission. Of course, negotiate this point before hand.
• If the agent that sells your home will also help you find another home to purchase you will be able to negotiate a even lower commission because of two home sales.
• Most real estate offices are quite large and must split the commission with the broker or even a home office, in case of it being a large franchise company. So it would be a good idea to find a smaller real estate company that would be more willing to take a reduced commission.
• Find a real estate office that will list your home for a flat rate. If your willing to do all the work in selling your home you could find a company that will just put your home listing in a multiple listing service. Companies that offer fewer services may just be willing to charge you a couple hundred dollars for using the Multiple Listing Service(MLS).
• If you have a real estate license for your state, whether you are buying or selling, you are entitled to half the commission. Check this for your own state. 
• Sometimes the negotiation process is at an impasse, it may break the impasse if the broker takes a percent off his commission to entice the seller to close the deal. 

There are many ways to get around the 6% commission. There are many real estate offices willing because of the tough times to take a cut in commission just to make a sale. The way to get this right is to shop around until you find a broker willing to take a reduced commission.

10 Great Tips When Looking for a Home to Buy

Shopping for a home can be an exhilarating or dreadful thing to do, depending on your personality. The applying for financing, the realtor's, the multiple homes to view, it's a lot of work. It's such a big decision that if done incorrectly, will have results that you must live with for a long time. I have compiled a helpful list of ten tips to get you started.

1. Never be the one who makes the first offer on a home. If the home is in your price range let someone else bid on it first. You may lose the bidding. But you will see what others think the house is worth.

2. On paper comparable houses look the same. Don't be in a hurry, because with a lengthy inspection you may find it has better views, parking or amenities. Take your time.

3.Realtors have a list of inspectors whose job it is to notice the worst details of the home. Skip the inspectors and get a seasoned building contractor who has seen it all. They will tell you where the dead bodies are buried. They have seen what damages can occur in a home and what it takes to repair them.

4. Never ever make an offer on a house that is broken or needs repairs. The seller may have the work done but will it be done correctly? There's a world of trouble that comes from shoddy work that may take months to show up.

5. The important thing when you select a house, is to be able to see what can be changed and what can't. For instance, you can change the rugs, repaint the walls, remodel bathrooms and kitchens. You can't change the road system, the neighborhood, the climate, or the schools.

6. Have a walk thru before closing. Turn on all the faucets. Check under the sinks. Turn on all appliances. The hot water heater,A/C, furnace, sump-pumps, sprinklers, etc. Do a thorough walk thru.

7. You need to look at your house closely and not get caught up in stupid things like granite counter tops or paint color. Look at doors and trim to see if they are cheap or solid, fixtures, kitchen drawers, closet space. Does the basement seem musty? Really take your time to look at the house you are buying.

8. Make sure that you really want to be a homeowner, especially of a house. There are hours of raking, painting, and other maintenance issues, plus no super to call when things break (and they will break). Owning a house takes more time, energy, and money than you expect.

9. Ask your homeowner friends for a list of expenses, so you know what you are getting into. Consider both ongoing expenses and big things out of nowhere like the roof needing replacing. Expect one big thing a year. Consider utilities, insurance, property tax, any assessments such as for sewers.

10. Spend some time in the neighborhood in the daytime and at night during the week and on weekends. Perhaps there is an incredibly noisy bar around the corner or a neighbor who plays his stereo at 2 am. Or neon signs that blink into the windows all night.

Spending some extra time, it will give you the confidence you are making the right decision.

Use these tips to access the compatibility of the home to your life style. Don't have house fever. People get caught up in the process. Remember take your time.

Related articles

• Important Tips for First Time Home Buyers (doorfly.com)
• Buying a Second Home - Tax Tips for Homeowners (turbotax.intuit.com)
• 40 Essential First Time Home Buyer Blogs (doorfly.com)
• Seven Monthly Bills Most People Have, and Seven Ways to Reduce Each Bill (thesimpledollar.com)

The True Value Of Improvements To Your Home

Image via Wikipedia
Since you can't get a dollar-for-dollar return on your home improvement, it's important to weigh the other advantages. In addition to creating a more enjoyable space, these may include:

Future goals

First impressions are everything. According to the National Association of Realtors, more than 77% of new home buyers start their search for a new house online, but they won't go near the property if the exterior doesn't look nice. So if you want or need to sell your current house, investing in "curb appeal" improvements that enhance the exterior condition of your home can be especially worthwhile. These types of updates may also help you move the property faster and secure a better resale price.

I often tell homeowners that although they may not see investing in a property 'facelift' as a high priority in terms of their own needs, when it comes time to sell, this type of improvement can bring in big dividends simply by increasing traffic to the homes. More eyes mean a faster sale and a better price — especially if the interior matches or exceeds the curb appeal of the exterior.

"Green" benefits

Some improvements create a return on investment that isn't seen in the property value but rather energy efficiency. Such improvements may also benefit the environment — especially if you have a home that's nearly three decades old.

According to the Joint Center for Housing Studies at Harvard, existing housing stock built prior to 1983 constitutes over 20% of annual CO2 emissions from fossil fuel combustion. Certain upgrades can help improve the efficiencies of these and other homes. For example, qualified dual- or triple-paned windows can help save as much as 15% to 20% on energy bills. Foam-backed siding can provide an insulation boost and also reduce sound transmission, which may enhance quality of life. And upgraded Energy Star appliances, HVAC systems and electronics can serve as "mini remodels" that pay for themselves by reducing utility costs, thus improving cash flow.

Now is an especially appealing time to complete these types of upgrades because of the tax credits available through the American Recovery and Reinvestment Act (ARRA) of 2009. The Act offers $4.3 billion in tax credits to homeowners who purchase Energy Star qualified appliances, including central air conditioners, furnaces (oil and gas), heat pumps (air source and geothermal), water heaters and more.

Other considerations

You need to weigh all of the pros and cons of a remodeling project — and have a game plan for financing — before you start. Here are some of the main things to consider:
Longer-term costs .... and benefits

Some projects may have additional future costs, while others can actually save you money. For example, if you're building an addition, you will have to pay the structural costs of the initial outlay and you will also need to furnish the new space, and heat and cool it year-round. Make sure to add these costs into your budget.

One thing I encourage people to do is to spend part of their remodeling budget on making the existing structure more energy efficient. First, I recommend an energy audit (usually around $500-600 for an average home), which shows the homeowner which energy-efficiency upgrades they could benefit from. Then they can choose the most beneficial upgrades for their home and implement them over time as budget allows.

Often the upgrades pay for themselves in only two or three years because the home is less expensive to maintain. Plus, the efficiencies gained from the upgrades will continue for the lifetime of the house, benefiting future homeowners, too.

Property taxes

If the project requires a permit, you can expect the tax adjuster to take an interest in your project. This could lead to a value reassessment and, potentially, increased property taxes.

Time frame

Quality of life is important, but you will also want to balance the reality of life events and consider whether you'll have time to enjoy the improvements. You may also have other higher-priority expenses that will need to take precedence. Your financial advisor can help you evaluate your situation so you can determine what's best for you.
Home equity line of credit

One option to consider to help pay for your remodeling costs is a home equity line of credit. This type of loan may be especially attractive right now considering today's lower interest rates. Your financial advisor can help you explore this option.

Do it yourself (DIY)

Are you handy? Or do you have time to learn some new skills? A major trend in home remodeling is for the homeowner to take on a large portion of the labor on a project. With labor costs typically running around 30% per project, doing the work yourself could significantly lower your overall costs. Or if you're not comfortable completing all of the work (e.g., electrical, plumbing), consider hiring out only those parts of the job. Also, you may want to be your own contractor to further reduce your costs and increase your return on investment.

Property conversion

Here's an interesting option to consider today: Instead of making improvements to your house, rent it out to someone else and purchase a new property that already includes everything you want at a dramatic discount. Many builders and homeowners are trapped with properties that are brand new, but aren't selling in today's buyer's market. You can take advantage of this property abundance, as well as lower interest rates, if you have good credit and are able to manage the expense. Once your tenants start paying rent, you can pay the mortgage and may even be able to take in some extra income.
What to ponder before you pound that nail

Ask yourself these questions to help you determine whether a remodeling project makes sense for you:
What makes my house feel like home to me?
What improvements would I need to make to enhance my quality of my life in this home?
Am I willing to invest the time and energy to do the work myself or do I need to hire an expert?
Am I prepared to be inconvenienced while the improvements are made?
How will I cover the costs?

If you have a clear vision, then it may be time to take on that remodeling project. That means it's time to meet with a minimum of three remodeling contractors to obtain cost and time estimates. And it also means it's time to talk with your advisor about your financing options and how a remodeling project fits into your long-term goals.

In the end, a home improvement may increase your home value for when it's time to sell. But one of the most valuable benefits of this type of investment today may simply be to make your home more enjoyable for you and your family.
"There's a direct relationship between how your house makes you feel and your perceived quality of life. When a home is beautiful as well as functional, you are far more likely to feel at home in your life. In our world today, that's a value that can't be quantified.

Related articles

• DIY Home Energy Assessment (lifegoggles.com)
• Real Estate Weekly: The best bang for your remodeling buck (marketwatch.com)
• 8 reasons to invest in your home (money.cnn.com)
• Builders' Show: Remodeling activity poised for a comeback in 2011 (blogs.consumerreports.org)

How To Sue Your Lanlord

Image by The Library of Congress via Flickr
Being in the apartment rental business for almost 30 years I have seen it all. All types of people with all types of problems. Lately I have been seeing many tenants having trouble paying their rent. With the economy in a downturn people have lost their jobs or have reduced hours at work. On top of that utilities, fuel and expenses have gone through the roof. So the amount of evictions have risen. Normally we can work something out with the tenant and we both part freinds. But sometimes we must go to court, it's sad for both parties.

The eviction procedure is second nature after you do it as many times  as we have had to do over the years. But what if you have a disagreement with your landlord. You could have a pipe break or roof leak and your possessions may be damaged, the landlord is responsible, but won't make good. You try to settle with the landlord but to no avail. What  choice do you have, but to sue.

As a tenant you have rights just as much as the landlord. You may have to seek out a lawyer if the dollar amount or the severity of the problem is substantial.  But if it's not, you can take your own case to small claims court and persue it yourself.

Here are 7 steps to successfully settle your issue with your landlord:

1. Be polite and business like. Start your communication with a phone call or better yet go down to the rental office and meet face to face with the manager. State your problem and what the landlord should do about it. Also bring your lease and note where it says that the landlord is responsible for the problem. The face to face meeting usually helps in the settling of the problem because it's hard to say no to a human face and much easier to say no to letter or phone call.

2. Follow up with a letter. If your initial approach isn't successful follow up with a letter. State in the letter what the problem is and where in the lease it says it's the landlords responsibility. Note in the letter a contact point for you and give a number of days till you expect an answer. Of course send the letter certified mail. This letter will instill in your landlord that you are serious and you probably will pursue the matter further if not satisfied. Note: it's in the best interest of your landlord to keep you happy and paying rent.

3. Continue to pay your rent. You signed a lease to pay your rent. It's an obligation your responsible for. Don't try to hold your landlord to his responsibility when your not keeping yours. It also looks very negative to the judge, if you go to court, because your legal standing will diminish if you are also violating a contract.

4. Get some advice. If your not getting a response from your landlord contact a tenant association or housing mediator who can step in before things escalate to a court case. These are usually free services.

5. Try small claims court first. If you have to go to court and and the dollar amount is under $5000 small claims court is your first legal option. Usually lawyers are not allowed their so you will be able to do this yourself and not have to pay a lawyer. The lawyers fee may be higher than the amount of the disputed claim.

6. Make sure your organized. Get your paper work organized and be prepared bring your lease, photos and proper documents to show the judge your side of the problem. Tell the judge the exact laws the landlord violated. With only a few minutes to speak it's better to state the laws violated and then the deceit second. Make sure you have all your evidence to prove your case.

Going to court can be a major endeavor if you have never done it before. But if your fighting for a return of security deposit or some damage to your property the effort can pay off.

IRS To Allow Deduction For Chinese Drywall Problem

Image via WikipediaHere in South Florida we have a big problem with many homes being built with toxic drywall manufactured in China. It emits a higher level of sulphur than regular drywall and corrodes metal, causing problems for air-conditioners and other electronic equipment. 
 
To make matters worse many homeowners have complained that the fumes have made them sick. The federal government hasn't been able to link the drywall to their illnesses, but has recommended that homeowners replace the drywall and wiring, a process that can cost more than $100,000. 
 
Complaints about the drywall started a few years ago with many of them in Florida and Louisiana. The problem is worse because homeowners must still pay their mortgages on the damaged homes while also paying for temporary accommodations, while their homes are uninhabitable. 
 
Of course many lawsuits have been filed but the process is long and drawn out. The good news is the IRS has created a tax deduction for these homeowners. Under the new rules taxpayers can deduct the casualty losses ( the cost of repairs from a sudden and unusual event) in the year in which the loss occurs as long as the losses are not covered by insurance or other parties. The restrictions are that they must itemize their federal returns. And deductions are only allowed on amounts exceeding $500 and on amounts that exceed 10 percent of the taxpayer's adjusted gross income. 
 
Taxpayers who have pending insurance claims can take advantage of the plan but must later report it as income if reimbursed later. 
 
At the present time most homeowners have gotten no relief from any source. This tax relief will only help people who have the money or can borrow it for the repairs. 
 
Many homes in my area are new construction and are built with the toxic drywall. They are just sitting there either unoccupied or never sold. They are just waiting on lawsuits and insurance claims. This problem just adds to the foreclosure problem, overbuilding and excessive inventory in South Florida. These problems contribute to the depressed prices here. This also leads to property values not being high enough to qualify for mortgages, aggravating the home sales market. 
 
These problems along with the foreclosure process at a dead stop will only prolong the borderline depression here. At least this IRS help will help some homeowners rebuild at get the housing inventory selling. With many homeowners facing these many challenges, believe it may take a decade to come out of these problems.

Get a CLUE Report if your buying a home

The purchase contract for a home usually contains a stipulation for financing and a home inspection. These stipulations allow the buyer to back out of the contract if they cannot get a mortgage or the inspection turns up something wrong. But another not well known report to show the buyer the insurance history of the house should always be requested. That report is called the homes CLUE report. 
 
The Comprehensive Loss Underwriting Exchange (CLUE) report will tell you what kinds of insurance claims have been filed by the previous owners. Why is this important to you as a buyer? The current owner may have forgotten to tell you about some past damage to the house. The CLUE report will tell you the exact date of loss, type of loss (water damage, mold, fire, etc.) and the amount of loss for all claims. Also it will tell you if it has a long history of claims which may get you denied home insurance which will impact if you can even get a mortgage. You may not get denied coverage, which is rare, but you may be put in a high risk pool or paying more than you should if the house was not messed up insurance wise. 
 
If you are going into contract it makes sense to put the CLUE report stipulation in it. This way you can make sure it's clean and if not straighten out the inaccuracies. Go to Choicetrust.com for the report. 

Home Ownership Gets a Bum Rap.

Last week Time magazine has a front page article called "The Case Against Home Ownership". In this article the writer Barbara Kiviat takes to task the pitfalls and negatives of home ownership. Barbara Kiviat is a prolific writer currently at Time, Inc. She also wrote for "Mutual Funds Magazine" and previously for "The Arizona Republic". She earned a Masters in Journalism at Columbia University - Graduate School of Journalism and a BA at John Hopkins University. 

In a through article she takes to task the idea of home ownership has been sold to us and it is harmful to our society. All throughout the last century starting in the early 1900's home ownership was pushed on the American population as part of a way to make society more functional. That it would bring economic and societal stability. But with it also brought the dark side of home ownership. 

The writer states,"The dark side which includes foreclosures and walkaways, neighborhoods plagued by abandoned properties and plummeting home values, a nation in which families have $6 trillion less in housing wealth than they did just three years ago. Indeed easy lending stimulated by a cult of home ownership may have triggered the financial crisis and led to the biggest bailout, that of Fannie Mae and Freddie Mac. Housing remains a drag on the economy. Existing-home sales in July dropped 27% from the prior month, exacerbating fears of a double dip recession and accelerating the accompanying slide in stocks that that took the Dow Jones industrial average to a seven-week low. And all that is just the obvious tale of a housing bubble and what happened when it popped. The real story is deeper and darker still."

The writer uses words like "cult" in her description of the way all Americans dream of owning a home. It seems we have all been brainwashed by business and the government. Our love of having our own home and the pride that bestows is a result of a marketing scam. Owning property has been a staple of the American experience throughout our entire history. Our history is replete with examples of the American citizen trying to carve out his piece of this land. But to the writer of the article that dream is a con strewn on us. And we don't even know it.

The writer cites examples of how the government has been involved in this. Starting in the 1800's when land was being sold very cheap or given away so as to foster settlement of the new western states. In the 1900's government set up campaigns to foster home ownership. Even after the Great Depression President Roosevelt created the Federal Housing Authority and later Fannie Mae to get lending on home mortgages started again. We see the campaigns continuing through the Second World War. Even up till the present time when Bill Clinton and George Bush encouraged home purchasing through their administrations policy's and laws. 

I can see how the writer sees the immense help and financial assistance provided by government over the last two centuries as a negative. She seems to believe the government should not be involved in the societal development of home ownership in this country. The undue influence of the government, their legislation and work with private industry was not necessary or wanted according to her. Again I can't agree because I feel that we would have found our own way of buying homes without government help. The government made it easier when times were tough or when economy was slowing. 

Later in the article  the writer again states how we were brainwashed into thinking home ownership was a special need for us. Maybe she doesn't experience the deep human need to call ownership of a home and piece of ground an integral part of the our life experience. She also states the "lack of Mobility" the purchase of a home creates. The financial mistake of putting all of ones assets into one thing. She goes on to state how a mortgage is a millstone around our necks. 

With faint praise she does state there are a few pluses that are stated in the article. Owners of homes invest more time and money on upkeep. You can do your own repairs and also it affords you to indulge you gardening hobby. But there seem to be even more negatives of home ownership like detached homes, as opposed to apartments, use 49% more energy. Which leads to the increased use of oil. The brainwashed citizens are again manipulated to feel they have to move out of the cities because they dirty and crime ridden. But now are a very pleasant place to live. It's also unfair that home owners get tax breaks and renters do not. This is unfair.

I have really enjoyed reading this article because it is very well written. I must admit Barbara Kiviat is an excellent writer. She obviously is highly educated and skilled in her craft. Her point of view is unique to say the least and I will read more of her articles soon. Yet I find her conclusions all wrong. She is a product of the current culture idiom of blame everyone but yourself when you screw up. 

In the book there is a deep slant against home ownership. The arguments against it just don't hold water. Trying to blame the government for pushing the idea of home ownership is wrong. Most Americans given the choice to own or rent, would probably own. To blame the high cost of ownership to renting is ludicrous. Of course it costs more to own. Repairs, taxes, insurance, mortgages, etc. make it more expensive. Rent if you want to save money, but your home is not yours. It belongs to someone else. And that's the big difference. Its like the difference between marriage and dating. You have a bond between your house you own and yourself. As you do your spouse and you. 

Its sad to blame the government, the banks, lenders and all financial institutions for making those poor people sign up for those mortgages. I say it was the personal responsibility of the borrower to know if they were able to replay the money they borrowed. Ultimately, the owner is responsible for his actions and the resulting failure or success of their decision. Why not bring back personal responsibility and repercussions for our actions. 

Home ownership is part of the American Dream and human experience. Its in our DNA to crave our own hearth and home. And when you do, be sure your able to pay for it.

10 Reasons To Rent

Image via Wikipedia

 
Don't you sometimes get sick of all the maintenance you have to do when you own a house? Starting with the most annoying thing, mowing the lawn and trimming the bushes or trees. Then there is painting to do and leaky faucet. What about that remodeling job your wife wants you to do. It's always something breaking. The American dream becomes the American pain in the butt. 
 
Over on CBS' Moneywatch.com they had a top ten list of the advantages of renting. 
 
1.Fancier Living: You may not ever be able to afford to own it, but with renting, you can enjoy that luxury condo overlooking the ocean. 
 
2.Perks!: A lot of apartments come with community pools and gyms. My favorite thing about the apartment complex that I lived in during college was the massive swimming pool they had. 
 
3.Water/Heat Included: Oftentimes, apartments come with water and heat included, so that's less bills that you have to keep up with. And the world is better with less bills to pay. 
 
4.No Need For Weeding: I've never mowed a lawn when I've rented. You don't have to do any yard work. 
 
5.When The Move Bug Bites....: While renting, the worst case scenario is waiting a year to move. Bad landlord? Move out. Annoying neighbor? Good-Bye. With a 
Home it's much more complicated. 
 
6.No Maintenance Background Needed: As mentioned before when a pipe bursts or any other maintenance issue pops up, just make a call to the landlord and sit back and relax. 
 
7.Momentarily Cheaper: there's a lot of us financially struggling thanks to the economy and when it may be money down the drain, I am not spending nearly as much as a mortgage. 
 
8.Home Prices Fluctuate: Its a buyers market or is it a sellers market? I have no idea, because I don't have to know, I rent. 
 
9.No Risks: if you do try to sell your home during a bad economic time, your at risk for losing money. But with renting, you hopefully get your deposit check back. 
 
10.Property Tax and Insurance: No taxes for renting and renters insurance is way cheaper than homeowners insurance. 

Pay Off House Or Invest?

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Pay off your house first or invest. I am trying to figure out what would be best. I've been doing the math on this problem and I have the figures. I have started with just adding $100 to my principle every month. If I do that it takes 5 years off my 30 year mortgage. If I add $200 it takes 9 years off. If I add $300 it takes 11 years off. That's some great results but that's still 19 years away at best. The $300 would be the the money I would have used to invest. So in 19 years I would have a paid off house and no retirement. 
 
Now here's where real life enters the situation. I have a plan to sell my house in 10 years. All the kids will be gone and I can downsize. So wouldn't it be better to use the extra $300 payment and invest it? I did the math and found that the $300 @ 8% would be over $50,000 at the ten year point. This would make sense for me because I have very little saved. If I had a decent amount in retirement then paying it off would make sense. 
 
Generally the results of paying extra on mortgage: 
 

• Less Stress
• No debt
• Money free to invest
• Security
• Never be foreclosed
• Lose tax deduction
• Cash poor
• Less risk

 
To put the money toward investing: 
 

• Always have the cash to access in emergency 
• Greater tax deduction 
• Market may crash and you would lose the investment 
• You could lose your house to foreclosure 
• More risk 

 
There are so many factors to consider. Its not just the math deciding what to do. The math works either way. The decision must go along with your goals. It also depends on where you are in life. Your income either rising or declining. Your age and how much savings you have. 

 
For me the benefits to a paid off house are to far away. My timeline of selling in ten years makes it impractical. My lack of savings makes it impractical. It makes sense for me to invest the money in a retirement account. Saving for ten years then selling my home, buying a smaller home for cash makes sense. No two situations are the same. You should run the numbers first to get the the facts then decide. 
 

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