Have you ever wondered if you can you get approved for a Home Loan? How hard is it to get a home loan, really. Maybe your monthly mortgage payment would be less than paying rent. Why rent when you can own for less?
Okay, before we get into it all, there’s a lot of information on this page. The benefits and pitfalls of renting or owning your own home, what makes more financial sense, tools to help you make that decision, and more… so it’s important that the main message of this article does not get lost, and that message is as follows. Too many people think owning a home is not for them, or it is for them, but only at some point in the distant future. Even though they would love to own their own home, they don’t think they would get approved for a mortgage. But here’s the deal. You never know until you try, and you might be flat out wrong. Your thoughts may be holding you back. You might get approved on your first try. You might not, but then you just try a second bank, and boom, you get approved. Just because you were denied from one bank, doesn’t mean they’re all going to be pricks. All banks are different. Also, if you’re a first time home buyer, there are many programs out there to help you realize your dream of owning your own home.
Life is about choices. Make great choices, live a great life. Make crappy choices, live a crappy life. Choices are about information. It’s hard to make good decisions if you don’t have the full picture. Get as much information as you can, and then make the best decision you can. If you try and you get turned down for a home loan, that’s okay. Now you have more information to make a good decision, when before you were just assuming. Plus, even if you get turned down, you may realize that you’re a lot closer to owning a home than you thought. You might be told that you just have to get this or that taken care of, and then you’re golden. This gives you a clear target, a goal, a simple task to complete, and then you can own a home. Bottom line, don’t be scared to try to get approved for a home loan. Best case scenario, you’re pleasantly surprised, and they say, we’d love to borrow you the money to buy a home. Worst case scenario, they deny you, you learn a great deal from it, and you use that to improve your life…and give them a shitty review on Google.
Why rent when you can own for less?
Why rent when you can own for less? Actually, there are quite a few reasons why you should rent even if you could own for less. This doesn’t mean renting makes more sense than owning a home. It just means there are variables that should be considered other than just financial considerations.
Benefits of Renting over Owning a Home:
- Flexibility – Life happens. You may need or want to move, for a myriad of different reasons: You could get a new job. You might hate the neighborhood, or just that one bitch-ass neighbor. You maybe want to move in with a girlfriend or boyfriend. Possibly you could have a kid. Maybe you just don’t like the place. There are many things that come up in life. Some are planned, some aren’t. Renting gives you the flexibility to move, and move rather quickly. Owning a home, not so much flexibility there.
- No unexpected expenses – When you rent, you’re probably not going to have too many unexpected expenses. When you own, all kinds of stuff could go wrong. Let’s think of the things that could break unexpectedly: The furnace could go out, as well as the fridge, stove, dishwasher, or maybe that piece of shit air conditioner from 1972. These things are going to cost anywhere from a few hundred to a few thousand dollars. Just a simple thing like your lawn mower breaking is an example of the little things that help wear down your bank account. When you rent, whether large or small, you have very few of these unexpected expenses.
- You spend less money – This benefit is similar to the benefit above, yet it’s different. Here we’re talking about all the extra stuff you buy when you own a home that you wouldn’t buy if you rented. These items aren’t necessarily unexpected expenses, it’s just stuff you need or want to buy. Yard decorations, new furniture, mirrors, shower curtain rods, garden tools, wall decorations, christmas lights, patio furniture…on and on it could go. Now it’s true that you may buy all these items if you rent, but the chances are much greater that you will be spending more money on items such as these when you own a home then if you rent a home.
- No investment risk – Whenever you make an investment, there is always some inherent risk. Inherent risk can be summed up this way, if you make this decision, there’s a possibility your life is going to suck more in the future than it does now. When you buy a home, you take on investment risk. The housing market could tank. Your house could be worth $50,000 less in two years from the day you bought it. You take on very little risk when you rent.
- Low down payment – When you buy a home, you may need 20 percent down. When you rent, many times you just need first months rent and the security deposit equal to one month’s rent. If you put a downpayment of 40,000 down on your home, there is opportunity cost to that. You could have invested that $40,000 elsewhere. Possibly started a business with it. Maybe just kept it in savings, so you have large rainy day fund. In savings that $40,000 is liquid. You can access it easily and quickly. If you have that $40,000 invested in your house, that money is tied up. You have lost it’s potential to help you financially in other areas of your life.
- Simplified billing – Paying your bills could be simplified if you rent. Many of your utilities including phone and cable may be included in rent. You might just have to pay one monthly bill instead of 5. Life is simpler.
- Low to no maintenance – Your maintenance is going to be lower of you rent. Now I’m not just talking your maintenance cost, but also just the time you spend on maintenance. The time you have to spend maintaining the property. If you rent, there’s a good chance you won’t have to mow, shovel snow, change the furnace filter, pull weeds, change light bulbs, etc. Life is simpler if you rent.
- Less liability – You have a higher chance of being sued if you own your own home. Some nice old lady walks by your place, slips on the ice on your sidewalk, slips and breaks her hip. Guess who’s paying for that? Your dumbass, because you don’t rent.
- Amenities – A swimming pool, hot tub, fitness center, tennis courts, basketball courts, etc. all in your backyard. Unless you’re loaded, you probably don’t have these things in your backyard if you own your home, but if you rent you can.
Owning a home makes more sense than renting.
We just covered all the reasons it makes more sense to rent than it does to own your own home. Now we’re going to look at all the reasons it makes sense to own rather than rent your home.
Benefits of Owning over Renting a Home:
- It’s a great way to invest – Owning a home is a great way to invest. It mixes a necessary monthly expense with investing, which I think is a great thing. Seventy percent of Americans have little to no savings. Most people just don’t save. Now is buying a home the smartest way to invest your money? Probably not, you can probably get a better return buying another asset. That doesn’t for a second mean buying a home isn’t a great investment. Every month when you pay your mortgage payment you are investing. It’s a great way to help build up a nest egg, especially when there’s a high likelihood you wouldn’t save at all if you didn’t own a home. Even if you invest by other means, such as buying stocks and bonds, maybe through a retirement fund, it’s still always a great idea to diversify. Buying a home is a great investment.
- Freedom – It’s your house. Do what you want. Remodel the kitchen. Paint the livingroom red. Build a deck. Do what you want, it’s yours!
- Pets – You want a giant ass dog like Marmaduke, get a giant ass dog like marmaduke. You’re the king of your castle. (or queen) do what you want.
- Maintenance – This is not only a negative. This an also be a positive. People enjoy fixing up their own home. They enjoying taking care of it. In fact, to some, it may be one of the greatest joys of life.
- It feels good – Owning a home feels good. Owning your own home is something to be proud of.
- Stability – Owning your own home creates stability in your life. A landlord can give you the boot, at the end of your lease, whenever he or she wants. Even if you want to stay, you don’t get that choice. Plus, once your home is paid off, then you really own your own home. You’re not beholden to anyone. You never know what could happen in this world. When the next great financial crisis comes, that makes the great recession look like just the small tremors before the shit really hits the fan, if you fully own your home by this time, you’re going to feel much more secure. When other people are getting foreclosed on, you won’t be. Even if you lose your job, and their is no new job in sight, you will have your home. Nobody can take it away from you. That is a very secure feeling and secure situation to be in, that is very hard to put a value on.
- Your own yard – You could have a yard if you rent, but it’s not really yours. Having a yard that is solely yours to do what you want with is a very nice thing to have. For the most part, you only can get that through owning.
- You can own for less – Okay, seriously now, why would you want to rent when you can own for less? Well other than all the reasons we mentioned above. As you can see, there are many great reasons to rent, and many great reasons to own your own home. Only you can look at those reasons, decided what it important to you, do an analysis, and make a decision.
Bottom line If you’re going to pay less per month to own than you are to rent. Heck, even if you’re going to pay slightly more, looking into the possibility of owning your own home is a good decision. Find out for yourself if that possibility is out there for you. You might be happily surprised.
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