I recently wrote an article that explained in detail why thinking of your home as an investment is simply faulty logic. So, by the title of this post, it may seem that I'm contradicting myself. Not so. While I don't advocate considering "investment value" when purchasing a home, there are still plenty of valid reasons to own instead of rent, especially in the current low rate environment. Let's take a look at why homeownership simply makes more sense than renting, especially over a long-term basis.
Reason 1: Mortgages are cheap
Even though rates have spiked about 1% over the past year or so, at a 4.5% interest rate, 30-year mortgages are still very cheap on a historical basis. This is significant because in many cases, it is actually cheaper on a monthly basis to own a home than rent. In the market I live in, $350,000 gets you a relatively basic three-bedroom home, and I live in a hurricane-prone area, so we have to pay flood and windstorm insurances, which brings the total mortgage payment on a $350,000 house to about $2,400. The same house would easily command $2,700 per month in rent.
Reason 2: Your life, your way
Want to get a new family pet? Go for it! Want to landscape your yard, put in a pool, add on another bedroom, or remodel your kitchen? These are some things that are out of the question in virtually any rental situation and can be as easy as applying for a building permit if you own your own home.
If you're a dog lover, finding an apartment can be a nightmare. Many of my friends who rent their houses are stuck with kitchens that look like something from a 70s TV show, and their landlords seem to be in no rush to update anything. The freedom to make your home truly your own is one of the best reasons to buy a house.
Reason 3: Credit
This may seem somewhat unimportant, since most people in a position to buy a house already have very good credit. Regardless, a mortgage will certainly report to the credit bureaus, and a rental company will almost certainly not. There are few items on a credit report that demonstrate financial responsibility and general stability in life better than a long history of on-time mortgage payments.
Reason 4: Equity
Having equity that can be tapped into if necessary is a big plus for homeowners. Having equity in your home is not only important to help pay emergency expenses, home improvements, or your kid's college tuition, but simply having the equity available to you makes it much easier to get a loan for almost anything else. If you have, say, $75,000 in home equity, a bank will feel much better loaning you $20,000 to buy a boat than if you were renting an apartment.
Reason 5: Not an investment, but still much better than renting for your financial health
Even though I've said your home is not a good investment, at least in the traditional sense of the word, it is still exponentially better for your long-term financial health than being a lifelong renter.
Let's say you buy a $200,000 house, and you put $40,000 down. This would make your mortgage payment $810.70 for 30 years at a 4.5% interest rate. At the end of the 30 years, you own the home free and clear, and hopefully it's appreciated significantly in value.
If you pay the same amount in rent, after 30 years, you'll have paid a total of $291,852 in housing payments. This is also a glorified scenario, as rental rates usually rise over time, making your actual total even more. At the end of 30 years, you'll have absolutely nothing to show for all of the money you spent.
So, while owning your home only provides 3%-5% annual returns on a long-term basis, this is still far better than paying out hundreds of thousands of dollars and not building any equity whatsoever. Homeownership is still the way to go!
John Holbrook - Realtor Amelia Island, Fernandina Beach & Yulee, Florida
Cell: 904-415-0171
Email: holbrook66@msn.com
www.johneholbrook.com
Thursday, December 26, 2013
5 reasons to Buy
I recently wrote an article that explained in detail why thinking of your home as an investment is simply faulty logic. So, by the title of this post, it may seem that I'm contradicting myself. Not so. While I don't advocate considering "investment value" when purchasing a home, there are still plenty of valid reasons to own instead of rent, especially in the current low rate environment. Let's take a look at why homeownership simply makes more sense than renting, especially over a long-term basis.
Reason 1: Mortgages are cheap
Even though rates have spiked about 1% over the past year or so, at a 4.5% interest rate, 30-year mortgages are still very cheap on a historical basis. This is significant because in many cases, it is actually cheaper on a monthly basis to own a home than rent. In the market I live in, $350,000 gets you a relatively basic three-bedroom home, and I live in a hurricane-prone area, so we have to pay flood and windstorm insurances, which brings the total mortgage payment on a $350,000 house to about $2,400. The same house would easily command $2,700 per month in rent.
Reason 2: Your life, your way
Want to get a new family pet? Go for it! Want to landscape your yard, put in a pool, add on another bedroom, or remodel your kitchen? These are some things that are out of the question in virtually any rental situation and can be as easy as applying for a building permit if you own your own home.
If you're a dog lover, finding an apartment can be a nightmare. Many of my friends who rent their houses are stuck with kitchens that look like something from a 70s TV show, and their landlords seem to be in no rush to update anything. The freedom to make your home truly your own is one of the best reasons to buy a house.
Reason 3: Credit
This may seem somewhat unimportant, since most people in a position to buy a house already have very good credit. Regardless, a mortgage will certainly report to the credit bureaus, and a rental company will almost certainly not. There are few items on a credit report that demonstrate financial responsibility and general stability in life better than a long history of on-time mortgage payments.
Reason 4: Equity
Having equity that can be tapped into if necessary is a big plus for homeowners. Having equity in your home is not only important to help pay emergency expenses, home improvements, or your kid's college tuition, but simply having the equity available to you makes it much easier to get a loan for almost anything else. If you have, say, $75,000 in home equity, a bank will feel much better loaning you $20,000 to buy a boat than if you were renting an apartment.
Reason 5: Not an investment, but still much better than renting for your financial health
Even though I've said your home is not a good investment, at least in the traditional sense of the word, it is still exponentially better for your long-term financial health than being a lifelong renter.
Let's say you buy a $200,000 house, and you put $40,000 down. This would make your mortgage payment $810.70 for 30 years at a 4.5% interest rate. At the end of the 30 years, you own the home free and clear, and hopefully it's appreciated significantly in value.
If you pay the same amount in rent, after 30 years, you'll have paid a total of $291,852 in housing payments. This is also a glorified scenario, as rental rates usually rise over time, making your actual total even more. At the end of 30 years, you'll have absolutely nothing to show for all of the money you spent.
So, while owning your home only provides 3%-5% annual returns on a long-term basis, this is still far better than paying out hundreds of thousands of dollars and not building any equity whatsoever. Homeownership is still the way to go!
John Holbrook - Realtor Amelia Island, Fernandina Beach & Yulee, Florida
Cell: 904-415-0171
Email: holbrook66@msn.com
www.johneholbrook.com
Florida Economy
Florida consumer confidence up from year ago
Floridians kept their rising confidence in the economy with a University of Florida survey showing spirits were higher than a year ago. Consumer confidence throughout the state remained in December at 77, the same as the revised November reading and three points above last year. Floridians' confidence in the economy has appeared to rebound after five months of dropping spirits from June until October. More from the Orlando Sentinel and UF News.
John Holbrook - Realtor Amelia Island, Fernandina Beach & Yulee, Florida
Cell: 904-415-0171
Email: holbrook66@msn.com
www.johneholbrook.com
Latinos & New Year’s Resolutions
One of those 12 wishes, you will have the opportunity to help to fulfill. The wish to buy a new home!
During the year we gave you a series of blogs talking about the Latino Community; the different segments within the community and some ideas of how to help them. It is our resolution for the next year to continue giving you information to make sure that the Latino Community will be able to fulfil one of those 12 wishes. The opportunity to be homeowners!
Latinos & New Year’s Resolutions
John Holbrook - Realtor Amelia Island, Fernandina Beach & Yulee, FloridaCell: 904-415-0171 Email: holbrook66@msn.com www.johneholbrook.com
Monday, December 23, 2013
Rates should go up
What it Means to the Consumer
In an article in MarketWatch today, Lawrence Yun, the Chief Economist at NAR, explained that sellers looking to move-up (to a better school district or larger home) “need to realize that it could be more challenging a year from now.” Yun stated the average 30-year mortgage rate currently hovers at 4.3%, but that could rise to 5% or 5.5% next year.
What it Does NOT Mean to the Housing Market
Some reports will now claim that housing prices will have to drop as interest rates begin to rise. There is no historical evidence of this. Below is a chart showing the last four instances of mortgage rates rising dramatically and what happened to home values at the time.
John Holbrook - Realtor Amelia Island, Fernandina Beach & Yulee, Florida
Cell: 904-415-0171
Email: holbrook66@msn.com
www.johneholbrook.com
Tapering Begins!
John Holbrook - Realtor Amelia Island, Fernandina Beach & Yulee, FloridaCell: 904-415-0171 Email: holbrook66@msn.com www.johneholbrook.com
Friday, December 13, 2013
Today's Prices Compared to Peak [INFOGRAPHIC]
John Holbrook - Realtor Amelia Island, Fernandina Beach & Yulee, FloridaCell: 904-415-0171 Email: holbrook66@msn.com www.johneholbrook.com
Thursday, December 12, 2013
Florida Jobs
What you need to know about Florida today
12/12/2013
Florida posts largest job gain of year in November
Last month, Florida posted its largest job gain of the year, according to payroll processor ADP. The Sunshine State added 19,450 private-sector jobs during November, more than any other state except Texas, which tacked on 28,030 positions, the ADP data released on Wednesday showed
John Holbrook - Realtor Amelia Island, Fernandina Beach & Yulee, Florida
Cell: 904-415-0171
Email: holbrook66@msn.com
www.johneholbrook.com
Monday, December 2, 2013
14,027 Houses Sell Every Day in the U.S.!!
14,027 Houses Sell Every Day in the U.S.!!
John Holbrook - Realtor Amelia Island, Fernandina Beach & Yulee, FloridaCell: 904-415-0171 Email: holbrook66@msn.com www.johneholbrook.com
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