The decision to purchase a home requires a buyer to weigh a lot of options. Leaving the seemingly comfortable confines of renting and becoming a homeowner is, after all, a big leap. As your clients grapple with the decision to stop renting and move on to purchasing a home, you can give them a nudge by being an education resource and doing your best to offer even-handed advice and information on the issue of buying a home vs. renting. You clearly have a stake in this decision but help educate your clients as to WHY now more than ever buying a home trumps renting.
Interest rates are low… for now
Remind clients that rates are at levels we haven’t seen since the 1970s, and are predicted to remain relatively unchanged for another year. If your clients wait too long buy their home, they might lose out on low interest rates that are predicted to come to an end with 2012. We are at the bottom end of the interest rate cycle right now and as it begins to edge higher in the next few years, landing a low interest loan will become much more difficult.
Buying a house means security
A New York Times/CBS News poll earlier this year said that 89% of all Americans continue to see home ownership as an important part of the American Dream. Renters are often forced to move when landlords sell a property, and any improvements they’ve made on the property are lost. Homeowners, on the other hand, own their destiny, and can make long-term plans for property improvements. Planting a new tree in the yard is the physical manifestation of laying down roots, which we associate with security. Home ownership is about pride and permanence, and that’s a great feeling.
Historically, a homeowner’s net worth has ranged from 31 to 46 times that of a renter. Paying a mortgage is like putting money back in your own pocket and homeowners also receive tax benefits that renters don’t enjoy. Best of all, a fixed mortgage means no more landlords jacking up rent, and as the owners buying power increases the percentage of income going toward the mortgage actually decreases.
No tax benefits
Renters can’t write off monthly payments like homeowners can with mortgage interest — this loss of tax relief is tantamount to leaving money on the field. Renters are penalized, buyers have the refs on their side.
Renting is not as good a deal as it seems
The freedom myth of renting is being exposed. Buying a new home is now cheaper than renting one in 98 of the nation’s 100 major metropolitan areas. As rental prices increase, even the short-term gains of mobility are overshadowed by the high cost and loss of potential equity that comes from renting instead of buying. Rent money is lost money, and that’s a cost nobody wants to incur.
Home owners can make repairs on their own, and are able to call in services and repair-men for big fixes. Renters are at the mercy of the landlord when it comes to leaking faucets, running toilets, insects and other pests, and home remodeling. What a great feeling to wave goodbye to an unreliable landlord and say hello to home ownership.
No control over property or neighbors
Ask your client if they’ve ever been prevented from modifying their rental property or making life decisions because of a landlord. Owners never have to ask for permission to paint a wall, buy a dog, even have a child. If your client wants to turn your garage into a monument to ping-pong, more power to them. Ownership cuts landlords out of the decision making process. Plus, no more shared walls.
If your client is ready to be nudged and convinced to buy a home, arming them with a complete understanding of the issues surrounding buying vs. renting will help them make an informed decision, and hopefully the right one. Can you think of any other options for potential buyers to weigh as they consider buying over renting?