Is The American Dream A Good Idea Right Now?
I guess almost everybody thinks about the day when they can buy their first home, or if a family already owns a home, they think about upgrading to a different home. But right now many people are looking at the realities of home ownership and asking themselves if it is really a good idea. Sure, people will argue that paying rent is just like throwing away money. You pay, get a place to live, and then next month, you pay again. But I would argue that people always pay rent, even when they own a home.
How Do Homeowners Pay Rent?
- Taxes – If you own a home, you probably pay a couple of percentage points, or more, of your home value in taxes every year.
- Repairs – When you rent, you call the landlord to fix most things. When you own a home, you have to fix things yourself.
- Interest on A Mortgage – Talk about money down the drain! If you carry a home mortgage, and most homeowners do, a large chunk of your payment goes for interest.
- Home Value – Traditionally, homeowners could count on an increase in the value of their home. These days, that home value could decrease. If a home has to be sold, unhappy homeowners may actually have to write a check in order to close a deal.
- Homeowner’s Insurance Premiums – Sure, renters buy renters insurance, but it is really cheap! Homeowners insurance costs more.
Do I Own or Rent My Home?
Now let me be honest. There are also advantages to owning a home, and I must tell you that I did purchase a modest home after renting for a while. I got tired of waiting for the landlord to do a mediocre job of fixing things, and not being able to tile or paint the way I wanted to. But sometimes, especially after paying for large repair bills, I long for the days when I could just call the landlord or move when things were not right with my home!
And I did buy a modest home because I wanted to make sure I had money left over to pay for things like taxes and repairs. But believe me, I often succumb to the American dream of moving up!
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