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Posts Tagged ‘Rent vs Buy'
MYTH# 8: Buying a House Helps Me Save for the Future
Reality: This is a risky and unwise investment strategy. Mortgages can work like a forced savings program. Instead of paying rent, you pay your mortgage and build up equity, assuming you stay long enough to cover the costs of buying, maintaining and then selling the house. But remember, nearly one third ...more
MYTH# 7: Five Year Rule
Reality: Nearly one third of all homeowners move within five years and many end up losing money. Most people who buy a house plan to stay there for a long time, but many end up moving sooner than planned for job and personal reasons. Short-term homeownership can be a costly proposition. The cost of a ...more
MYTH# 6: Low Interest Rates
Reality: Low interest rates may actually serve to make buying more expensive. It sounds counterintuitive, but low interest rates can actually make housing more expensive, not more affordable. How? Well, if low rates bring a lot of new buyers into the market, housing can turn into a seller's market. ...more
MYTH# 5: A House is a Safe Investment
Reality: There are very few risk-free investments and a house is certainly not one of them. House prices are not a one-way escalator going up. They can also go down. Predicting whether a specific house in a specific market will appreciate is very difficult. As financial columnist Jane Bryant Quinn noted, ...more
MYTH# 4: Housing Costs Stay Constant
Reality: Only your mortgage payment will remain constant. Other costs can go up every year. And if you have an adjustable rate mortgage, your monthly payment can rise too. Your mortgage payment is just part of your housing cost as an owner. You also have to factor in the cost of property taxes and homeowners ...more
MYTH# 3: My mortgage payment will be less than my rent
Reality: Your mortgage payment is just the beginning. The “hidden costs" of ownership can add up to thousands of dollars a year. Few prospective owners truly appreciate how expensive annual maintenance on a house can be. A Wall Street Journal commissioned study concluded that “almost ...more
MYTH# 2: Paying rent is throwing away money
Reality: For the first five years of ownership, you are simply giving away money to the bank. During the first five years, more than 80% of your monthly mortgage payment is interest. And nearly one third of all homeowners move within five years, before they start building any real equity. Add in the ...more
MYTH# 1: Benefit from Morgtage Tax Deduction
Reality: A majority of owners reap no annual tax benefits from owning a house. The biggest homeownership myth in the country is that owning a house is a huge tax break. If your mortgage interest and other qualifying expenses aren't more than the standard deduction ($9,500 for joint filers, $4,750 ...more
Don't Buy the Myths: Renting Can Be a Smart Decision
(Republished here with the permission of the National Multi Housing Council) Rent vs. Buy “You need to buy a house." How many times have you heard that? Turns out that could be bad advice. Here's why: Every year, thousands of Americans jump into homeownership for the wrong reason, usually ...more