Misconception #5 Buy vs Rent

Misconception No. 5
By buying a home, I’ll become a victim of the foreclosure mess.

The Reality – While foreclosures have presented very serious concerns for
those people affected across the country, it’s important to remember that
they account for just a small percentage of all homes sold.
In the midst of all the negative news headlines, it’s easy to forget that
mortgage money is still available for qualified borrowers. To help prevent
foreclosures in the future, lenders have returned to upholding higher
standards. These may require you to demonstrate strong basic borrowing
“fundamentals” such as proof of income, solid credit, ability to make a
down payment, etc.
Finally, as you begin your home search, it’s critical to be well-educated in
terms of the various mortgage options available. Be realistic about what
you can afford, and remember, if something sounds too good to be true, it
probably is. Conservative planning for today (and tomorrow) is the first
step toward securing a mortgage that best fits your budget.

Misconception # 4 - Buy vs Rent...

Misconception No. 4
It’s cheaper to rent.

The Reality – This may or may not be so. Because of the current state of the housing market, many are foregoing homeownership and turning to rentals. This influx of renters may be having an impact on the supply and demand of rentals and driving rents higher. Most real estate sales associates will have a strong understanding of the rental market in the community and can refer potential buyers to a reputable mortgage lender. It is imperative to ask questions and understand the financial implications and costs of a mortgage.

Misconception # 3 Buy vs Rent...

Misconception No. 3
It’s better to rent and wait for the market to bottom out.

The Reality – Despite recent challenges in the U.S. housing market, buying a home remains a highly sound financial decision for those with documented income and a good credit history. Yet some buyers are still sitting on the sidelines trying to time the market bottom – which is always ill-advised.

By the time most folks recognize the true bottom, prices are already on their way up. Buying a home should always be approached as a good long-term investment, providing equity accumulation, cost appreciation and tax benefits over time. Homeownership is a lifestyle decision, a highly personal decision. Yet today’s current market, while different from market-to-market, is generally typified by falling or stable home prices, still-low interest rates, and a large number of homes on the market. Historically, low or falling interest rates allow more to enter homeownership which in turn helps trigger rising housing prices – resulting in the start of a “sellers market.” As the number of consumers are “priced out”, home inventory begins to increase and the cycle goes towards a balanced or even a “buyers” market. Prices will generally stabilize allowing economic conditions for those “priced out” to improve and the cycle begins again. The reason why many point out that now is a smart time to buy is because of the historically low interest rates we are seeing coupled with the buyer’s market which exists in most communities. Speaking with a knowledgeable real estate professional can help one navigate the nuances of a specific market, including how interest rates are impacting home prices and financing options in that region.

The most important thing to remember is that housing is not a quick-in, quick-out investment. When purchased with the longer term in mind – with proper guidance from a real estate professional and other savvy financial or legal professionals – housing is one of the historically safest investments consumers can make.

Myth #2 - Buying vs. Renting?

Misconception No. 2
Renting a a home isn’t all that different from owning.

The Reality – More so than apartment dwellers, the lives of people who rent a house can often mirror those of actual owners. You’ll see many home renters making routine repairs, gardening, shoveling the driveway when it snows or cleaning the gutters after the leaves fall.
But there is one fundamental difference. Unlike equity built with each monthly mortgage payment, the rent that person is paying is producing zero future financial benefit. In fact, a renter essentially paid the landlord’s mortgage and likely additional utility costs.
Since most homes increase in value over the long term, a home not only provides a place to live but will ultimately provide return on a consumer’s original investment. Additionally, when it comes time to apply for other forms of credit, responsible homeowners are more desirable borrowers.

Paying a mortgage on time each month shows lenders that a consumer is secure, stable and effectively manages finances. And those home renters who take it upon themselves to help make property updates and repairs? They’re building equity – just not their own.

To Buy or to Rent...THAT is the question?

Today I begin this post covering a new series...To BUY or to Rent and I will cover the Top Five misconceptions to shed some light on whether you should take advantage of LOW interest rates, abundance of inventory, and Tax advantages. "They" say hindsight is 20/20 and I know in less than 2 years many people will look back wishing they had made the jump to homeownership rather than wasting money on rent. In today's market, many first time homebuyers mortgage payment would be less than rent in many apartments. It is easier than you think.

Misconceptions On Buying Versus Renting

While there are a number of misconceptions surrounding whether it is best to rent or buy, one of the biggest may be the notion that renting is simpler. For example, when the refrigerator in a rental needs repair, the responsibility falls on the landlord. When new homeowners sign their name on the dotted line, responsibility is theirs. Yet stating that renting is the “simpler” choice takes a narrow view of the total set of questions and issues that go into the
buy-versus-rent decision.

Here are a few of the misconceptions relative to buying versus renting:

Misconception No. 1
The tax benefits derived from purchasing a home takes forever to offset all the other costs involved.

The Reality – Most people know that tax write-offs of mortgage interest are among the biggest financial benefits of home ownership. But some people question whether this benefit is really great enough to offset the “big picture” cost of ownership – including the hefty down payment and closing costs needed to get a former renter across the threshold to homeownership.

Homes typically appreciate in value over time – at the same time the homeowner builds his or her equity in the property through monthly mortgage payments. Though tax offsets begin right away (really starting to “pay off” in that first tax filing season after a home’s purchase), the bigger picture benefits tend to come with time.

That’s why potential homebuyers should carefully evaluate how long they expect to stay in the home that they are considering purchasing. If they anticipate staying in their first home only one to two years – especially in today’s market – they’re not as likely to get a good return on their initial investment. If, on the other hand, they are planning on staying several years in the same property, the scales of benefit start to shift – and the value of all that they gain financially from homeownership is likely to outweigh those initial costs to get in the door.

JOIN ME TOMORROW FOR MISCONCEPTION # 2! Stay tuned!

On the Fence?

Everyday I am inundated with news reports about the economy, stock market, the real estate market, and now President-Elect Obama. Most of these reports are either flat out negative or slanting that way.

Today I read in the Nashville Business Journal and I quote, "Tennessee is the nation’s second best state for business, according to Site Selection, a leading economic development industry magazine. The state moves up from No. 6 in the annual rankings".

Real estate markets remain strong in areas where jobs are created and remain strong...so why are buyers still sitting on the fence? Now REALLY is a Great Time to buy for many reasons. Interest rates are still in the low to mid 6%, inventory levels are higher creating opportunities for smart purchases, and Tennessee is the nation's second best state for business!

I am trying to find a way to muddle through the daily negative, chicken little mentality to find something positive to report. You be the judge!

CHANGE...What does that mean?

So! Today we have a new president! Not the one I would have liked to see but the people have spoken. People voted for change...what EXACTLY does that mean? There are many definitions of change but I think the following definition clearly defines the change that happened last night:

• to become different: Overnight the nation's mood changed.

After watching the entire process unfold last night watching both McCain's gracious concession speech and Obama's hopeful speech, I woke up this morning determined to approach this new-found change with an open mind. I listened to Talk Radio this morning and a caller who voted for Obama called in and after many attempts from the host to get her to identify in specifics this "change" she spoke about, it dawned on me that no one REALLY knows what IT is but they know they want it.

I think for many people, Obama represents a way of moving beyond the past atrocities we humans can do to one another and for those who didn't vote for Obama, the change he brings represents fear...fear of the unknown. I, for one, do not want to allow myself to be fearful nor do I want to close my mind off to any positive things he may bring to this country. Does that mean I agree with his political record...ABSOLUTELY NOT!

No matter what people say, this country is still divided - and always will be. Not necessarily racially divided, but divided nonetheless. After record voter turnout last night in quite possibly one of the most important elections our country will ever see, the country ultimately were split pretty much down the middle. We all have different moral compasses and therefore this "change" will always be viewed differently. That is what makes this America.

Redistributing the Wealth in Application

DOES ANYONE SEE ANYTHING WRONG WITH THIS PICTURE??

This morning while checking my email I received a post from one of my meetup groups that I have to share. As I read her comments I giggled to myself as I read her words. I got her permission to share and the comments below are verbatim. I think I will try this at my next outing...


Today on my way to lunch I passed a homeless guy with a sign the read 'Vote Obama, I need the money.' I laughed.

Once in the restaurant my server had on a 'Obama 08' tie, again I laughed--just imagine the coincidence. When the bill came I decided not to tip the server and explained to him that I was exploring the Obama redistribution of wealth concept. He stood there in disbelief while I told him that I was going to redistribute his tip to someone who I deemed more in need--the homeless guy outside.

The server angrily stormed from my sight. I went outside, gave the homeless guy $10 and told him to thank the server inside as I decided he could use the money more. The homeless guy was grateful.

At the end of my rather unscientific redistribution experiment I realized the homeless guy was grateful for the money he did not earn, but the waiter was pretty angry that I gave away the money he did earn even though the actual recipient deserved money more. I guess redistribution of wealth is an easier thing to swallow in concept than in practical application.

Wake Up People!

ROLL TIDE!!!

Ok, so I've never really been a College Football Fan until this year. Where have I been all my life? I have been watching the Bears lose year after year give or take a few wins...BUT college ball has so much more to offer! The action is way better and the plays are UNREAL! I am watching Alabama beat Tennessee and although I live in TN I have picked Alabama as my new favorite college team. I especially like a quarterback who has three names! Who goes by three names besides serial killers? The picture of Bama's quarterback is such a sweet one. I mean this kid looks like he is 12 but this season he gets the job done. ROLL TIDE!!!!

Are you Ready?

This is my first post so I guess that makes me a newbie. I don't know about you but as much as I enjoy politics, I can not wait until this election is over with. I know many people will be too. It is interesting to me the level of excitement and passion on both sides of the race. I could really get on my soap box but since this is my first post I think I will keep it nice and easy. As I prepare to end my day, my prayer is that everyone gets out to vote their conscience. We all have the duty and responsibility to check out what each candidate stands for and vote the candidate that is most aligned with our own set of moral standards. Nowadays, with the Internet such a part of everyone's life, there really is no excuse to not be informed. Are you Ready?