Why is owning better than renting?
There are a significant number of reasons why owning is better than renting. Tangible benefits are those that you can see, touch and measure. Intangible benefits are those you can't see or touch. Just because you may not see the benefits, doesn’t mean they don’t exist. There are certain aspects to home ownership that you experience, feel and sense.
100% of our graduates tell us that they really didn't have any idea what they were missing out on when they were renting. Our goal is to help you realize that home ownership will cost you less money, it will feel better, and it will be profoundly more positive on your lifestyle and happiness.
Privacy is defined as the state or condition of being free from being observed or disturbed by other people. How valuable is it to you to be free from disturbances from either your noisy neighbors or that creepy maintenance guy that can show up at your door for a “fire-inspection”? How valuable is it to enjoy the peace that comes by having privacy in your own home?
What about those neighbors? When you live in an apartment complex, how many times will you find yourself hearing the doorbell ring and wondering if it’s your door or the neighbors? How frustrating is it to be forced to respond to the loud noise of your upstairs neighbor that insists on playing his or her sound system at the max sound setting? What about repeatedly hearing the footsteps of that neighbor above you when you are trying to sleep?
Apartment living can be uncomfortable and annoying to say the least. Imagine smelling foul odors like cigarette smoke or garbage outside your apartment, or worse, coming through your vents or walls.
Did you know that no matter whether you live in an apartment or house, your landlord may be able to enter the premises at their discretion? It’s the “I was concerned about …anything” clause. This doesn’t foster comfort, safety or happiness does it?
Landlords can increase your rent up to 2.5% per month and say it’s because of increasing maintenance costs. If you don't pay up, then you could come home to find your belongings on the curb. The number of illegal evictions in the US are estimated to exceed tens of thousands each year.
Real estate experts have observed many landlords illegally keeping security deposits from tenants. Said landlords will look for any excuse they can to keep your money when you move out.
Landlords have been known to be nosy, creepy, absent, racist, incompetent and in some cases abusive. When you own your home, you don’t have to deal with anybody treating you poorly, unfairly or telling you what you can or can’t do or more importantly increasing your monthly cost of living.
Pride & Confidence
Ownership gives you a sense of dignity and confidence that renters never experience. You become a more steadfast and concerned citizen of your community. You become more self-confident and self-reliant. The mere act of becoming a home owner transforms your mindset.
Ownership gives you roots, a sense of belonging, a true stake in your community and well-being.
Not everybody has the same standards and it can be uncomfortable dealing with neighbors that don’t care about their surroundings.
Consider the damages to the walls and other areas that you have to see every time you pass that way. What about shared garbage? Your neighbor in apartment 2b throws their old sofa away and it becomes an eye sore?
People take better care of something that is theirs rather than something they are borrowing. You could live in the nicest perceivable apartment complex you know of and people will still puke in the pool, spill their drinks, throw trash around, because it’s not their responsibility to clean up what they are borrowing.
Equity & Mortgage Debt
Equity is the monetary differential between the value of your home and the mortgage debt you owe. Equity is the difference between what your property is worth and what you owe the mortgage company.
When you first purchase your home you will have approximately 4% equity or money in your home. If the home is valued at $100,000 that means that you have $4,000 of equity in your home. This means that you owe the bank approximately $96,000 in terms of mortgage debt.
When you buy a home, once you pay off the mortgage, you no longer have a debt payment. You do however, still have housing expenses. You will continue to have insurance premiums and annual taxes to budget for. These insurance and tax costs make up about 15% to 25% of your housing payments. If your mortgage payment was $1,000/mo; then you would expect that your insurance and taxes made up about $150 to $250 of that payment. At the end of 30 years you would still pay this $150 to $250 a month.
A common misconception is that you have to live in your home for the entirety of the 30 years. You have the option to sell at any time. We’ve helped many families purchase their first home and then three years later sell that very home and buy another one.
Why might you want to sell your home? Your job may change and you may want to move closer to your new employer. Your household size may increase or decrease and it might make sense to sell your home to purchase a different home that is bigger or smaller. There are all kinds of situations that could result in the need or want to sell your home.
America is a country that holds the promise that if you are willing to work hard, and give your best, that you should be able to have the opportunity to prosper and build a better life for your family. Home ownership has historically been the number one way for working Americans to pull themselves into the middle class of society.
Home ownership offers consumers the opportunity to build wealth, through equity and appreciation [a benefit renters simply do not enjoy].
To strengthen our communities we have to take a good look at the future. Do we want America to become a two-tiered society, where working and middle class families are expected to rent for life, and home ownership is exclusively available to the wealthy? No, we want to restore and maintain the opportunity for hardworking, responsible Americans to own their own homes and build a better future.
How safe do you feel when you don’t know how many of your neighbors are criminals? When there are many more people living on top of each other, crime and security have to be considered.
Consider that infamous walk from your car to your apartment. If the parking lot is not scary enough, you never know which neighbor may pop out of their apartment as you walk toward yours.
Even the most secure apartment complexes can’t protect you or your family from the neighbors inviting their friends who might be criminals or have criminal intent into your complex.
The social well-being of those that feel they are part of a community are said to be better for home owners versus renters.
Consider the school dropout or crime rates for neighborhoods where there are more home owners than landlords and renters. Statistics show that children of home owners do better in school and are more stable in their interactions with others.
Control of your environment
Who determines whether you can have that pet you love, change the color of paint on your walls or upgrade your carpet to wood flooring? Your landlord or you?
For the landlord it’s about charging you more money to have that pet or denying you the privilege, either way you have no say in the matter.
What about changing the color of paint on a wall? What about switching out those old carpets with nice wood floors? No way, because you know you can’t take those nice floors with you when you move. That just wouldn’t make financial sense.
Think about all those future events that are going to occur in your household. Consider those special moments that you experience with your family, friends and loved ones. With today’s technology, we take more pictures on our mobile devices than ever before. Fast forward yourself through time and picture yourself in your home flipping through your pictures from the previous decade or so. What feelings are you going to experience?
How important is it for your friends and family to enjoy fellowship at your place? Consider the quality of those social gatherings you have from time to time in an environment where you have no privacy and neighbors that don’t have the same standards that you do. Perhaps you would enjoy those holiday get-togethers more if you owned your home?
As you scroll through the images, you see your family and friends, and in the background is your home or the place you were renting. Which is going to bring better memories, better times?
Entertain guests how you want
Home owners enjoy the benefit of entertaining guests how they want. There's no landlord to limit the number of friends or family you have visit or the frequency that they visit.
Enjoying large gatherings like cook-outs, parties and special events without having to worry about disturbing your neighbors in the apartment next door.
Payments that don't go up
Did you know that mortgage rates are at an all-time low and they are expected to continue to fall as rental rates continue to increase?
The fact is you have to make a monthly housing payment no matter what. The question is whether making rental payments makes more financial sense than making mortgage payments.
Rental payments increase by as much as 8% or more per year. When you own, you still have to make monthly payments but they don't increase like your rental payments. This results in huge savings over time in unpaid rent.
Some renters profess that they are afraid of being “stuck” in a mortgage with debt and would prefer the freedom of renting. This line of thinking is not accurate.
You can sell your home in most cases as quickly as it takes for a renter to properly exit a rental lease agreement.
As an owner, if you sell your home, the proceeds from that transaction will be applied first to pay off the mortgage. If the value of your home was exactly what it was when you purchased it then you would get all the money you paid for however long you paid it. The longer you live in your home and make mortgage payments the more money you will have should you decide to sell it.
Equity & Appreciation
Appreciation is the increase in value of your property due to variables like inflation, supply & demand, improvements and other factors. You can increase your net worth by paying down your mortgage debt and waiting for your home to appreciate.
Your home is considered an asset. Assets are what the middle class leverage to build wealth. You can sell an asset for cash and because you own the asset if it gains value you can make a profit on the sale.
In real estate this profit is called “appreciation”. Appreciation is money you earn above and beyond any equity you’ve built by paying down your mortgage.
If you purchased your home this year for $100,000 and then sold it in the future for $130,000 you would realize a monetary gain/profit of $30,000.
The equity built up from decades of responsible home ownership has resulted in many businesses being started, many first generation college students going to college, and many families saving a nest egg for their children to build upon.