Thinking about Buying Pre Foreclosure Home.
I have been out of school for about 3 years now and paying
$1,500 for rent. I have been thinking about buying a home because I feel
like I am throwing money away. What are some advantages of owning a home?
Is there anything else I should consider?Al.[/quote]
Most people are financially are far better off renting. Any rent vs buy
calculator will show you that. The cost of the mortgage and Realtor
commissions will nullify any appreciation and tax benefits unless you plan
on staying an average of 5-7 years and luck is on your side. Home ownership
is the "American Dream." And it's just that, a dream. In REALITY the bank
owns your home and you are paying the bank rent yet you are completely
liable for everything from an injury on "your" property to your sewer
backing up into you well water. But take your pick. It's six of one half
dozen of the other.
Those who say their house appreciated tremendously aren't thinking past
their nose. What good is it to have a home that doubled in value in three
years only to find that once they sell at this "enormous profit" they can't
buy another home for less than the let they old one go for. Out of the
frying pan into the fire.
In addition, if sh_t happens and you lose your home a foreclosure it will be
in your public records FOREVER. If you can't pay the rent (at worst) it will
show only on your credit report for 7 years.
If common sense doesn't turn on a light in you mind, maybe the fact that the
Bush Administration has fervently promoted it might
If someone's home appreciates in value, that doesn't mean they have to sell
that home to buy another high-priced home. They can borrow against that
home and use the money to buy a second home. Then rent out the first home.
Do that with a 3rd, 4th, and 5th home over your lifetime and you'll end up
with 4 or 5 income properties for retirement and each of them will be worth
a lot more than their initial purchase price.
The book I always recommend about this is called "Real Estate Riches" by
Dolf de Roos, PhD.
If you do read this book, I'd be interested in hearing what you think of it.
I would also be interested in hearing what anyone else who has read this
book thinks about it.
(I don't know the author and I'm not in the book selling or book promoting
business).