| Buying a home is a huge step. Buying a home takes | | | | will not fall. In the long run most homes will not lose their |
| savings, credit, banks, realtors, lawyers, and a number | | | | value but there are a few great examples recently of |
| of other institutions and individuals that are complex | | | | home prices falling and when a home is super |
| and time consuming. The great thing though is that | | | | expensive, a falling home price can be truly detrimental |
| owning the home is a huge step of actual freedom. | | | | to the investor as they will not be able to afford the |
| Every month a sizeable portion of the paycheck is not | | | | huge loss in the value. |
| going towards rent, or in other words, someone else's | | | | Most of the time, the argument to own is a lot stronger |
| equity. A homeowner is free to decorate, remodel, | | | | than the argument for renting. But in certain situations, |
| repair, and most importantly, sell the home and recover | | | | renting is the right thing to do. If a potential home buyer |
| costs and hopefully earn money on the investment. | | | | is in a job that is changing and they are improving or |
| Homes have historically risen in costs. Homes are | | | | working their career, and are likely to be asked to |
| situated on real property that will most likely appreciate | | | | move, then renting is a better idea as the moving |
| in value. Home appreciation has its catch though and | | | | costs are so much lower than trying to sell a home |
| that is that it takes time, energy, effort, and patience. | | | | and the transaction costs involved. Also in a |
| When a home is sold or bought, there are several | | | | decreasing housing market, renting is the only way to |
| costs that are relatively high involved in the transaction | | | | go, for obvious reasons. |
| such as the closing costs and the simple cost of | | | | The best rule of thumb though one should consider is |
| moving. You should not buy a home unless you are | | | | how much less of a monthly payment will one have to |
| relatively positive you can live in the home for up to | | | | pay in the short run when it comes to either renting or |
| four to five years. The early payments on the | | | | buying. If renting is more than 35% less, then it is a |
| mortgage are mainly interest and don't start really | | | | great idea to rent. That is enough of a difference that |
| paying the equity until the loan is closer to being repaid. | | | | one will be saving a lot of money in the long short run if |
| This means that a homes worth really comes from | | | | they are renting. Meaning, in the total long run of things, |
| the naturally rising price of real estate. | | | | home ownership is better as the increase in the value |
| Things get especially scary when the price of a home | | | | of the home will be great but in the short run, if one is |
| falls. Homes are truly expensive. They are usually the | | | | planning on moving, and renting is 35% less of a |
| most expensive object that a person will invest in or | | | | payment each month, then renting is the option one |
| purchase in their lifetime. The hope is that home prices | | | | should go with. |