Tuesday, November 11, 2008

Should I RENT Or Should I BUY now..........

Is renting just like throwing money out the window? Well yes and no depending on your view and circumstances. If you’re a smart renter you are putting away your hard earned money and investing in Stocks, Bonds and other investment vehicles. If your not then YES you are must likely throwing your money away and should think about purchasing a home. At least with a home you will hopefully grow equity. Real Estate should be a long term investment or at least the real estate you live in should be, investing in real estate is a whole other subject and not for the first time buyer.

But like so many recent home buyer’s that purchased during the boom you will want to make sure you can afford your new home. One of the first things I always ask a potential buyer is; what is your monthly housing comfort level. That is the best place to start because you may qualify for a larger payment but will you be comfortable making that payment. Remember you what to live in your house and be happy. NOT live to make your house payment. So be careful when someone tries to give you something you can’t afford, you are the only one that knows really what you can afford. Make sure you understand the terms of your loan. Make sure you have a well planned budget you can stick to.

Benefits of rent vs. own……

Renting leaves you free to move on when you want. NO ties to hold you down. With a home you are there until it sells. If it’s a seller’s market well no worries, but if you have to sell in a buyer’s market or slow market then you could be there for a while. Just as there are good reasons to rent so are there for owning your own home. The obvious reason come to mind like NO landlord, who needs someone always butting in if you want to paint your room purple or bring home a lost puppy. When you own your home it’s yours. Have your pets and purple room all day long. Oh and did I mention the tax benefits to owning. Well that’s just the frosting on the cake. You will get to write off the interest that you paid your lender every year on your taxes reducing your income and thus reducing your debt to the IRS.

Your geographical location could make all the difference……

Some areas in the good old USA are really hard for first time homebuyers. Here in Hawaii the medium Single Family Resident (SFR) is $625,000 while condos mediums are $300,000. Rents starts out around $1100.00 and up to $3000.00 for a normal 3 or 4/2 home on Oahu. Needless to say there are not many first time homebuyers in Hawaii. In fairness Hawaii does have areas of affordable housing we just need more. But many other states have this same problem. They too are finding ways to incorporate affordable housing and are closing the gap for the first time homeowners. Be patience – save your money – make good investments and if your company has a 401K plan you should be taking advantage of this benefit, if your company matches funds and you’re not participating then you really need to start participating today. Remember a 401k has penalties for early withdrawal but some will allow a withdrawal for the down payment of your primary resident.

If your thinking about buying and have questions - Ask and I'll anwser.
Even if you not buying I'd like to hear your opinion.
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