Home Ownership – HomeownersInsurance.org http://www.homeownersinsurance.org Homeowners Insurance Tips and News Fri, 28 Jun 2013 15:01:02 +0000 en-US hourly 1 https://wordpress.org/?v=4.8.1 Home Ownership: The Ultimate Investment? http://www.homeownersinsurance.org/home-ownership-the-ultimate-investment/ http://www.homeownersinsurance.org/home-ownership-the-ultimate-investment/#respond Mon, 19 Jul 2010 15:25:53 +0000 http://www.homeownersinsurance.org/?p=748 Most of us have grown up being told, and dutifully believing, that home ownership is the first key to building wealth. Even Oprah Winfrey has chimed in to the discussion, claiming repeatedly that owning your own home is the first step to accumulating wealth (of course, hosting the nation’s most watched talk show doesn’t hurt either). Buying a home is, of course, the best investment we will ever make. Or is it? The truth of the matter isn’t as simple as it sounds. Don’t get us wrong, home ownership can be a great thing. But when you factor in related costs such as homeowners insurance, property taxes, and maintenance, the cost of owning your own home ends up being a lot more than the bottom line of your mortgage. So what is it that made it seem like such a good deal for our parents and grandparents?

In many ways, the reasons why buying a home looked like the best investment our parents and grandparents ever made was because, in hind sight, it actually turned out to be their best investment. And depending on how you go about it, it can be yours, too. If you’re going to buy a house as an investment, however, take these lessons from the past:

  • Buy a home that’s within your price range. In past generations, people bought houses whose total purchase price was about three times their annual income or less. That generally meant making do with a modest home. Unless your income is miles north of modest, your choice of house should be modest, too. Especially if you’re buying it with the idea that it’ll be a good investment. Bear in mind that most of the other expenses go down with the price of your home, including utilities, homeowners insurance, property taxes, and more.
  • Don’t buy a house until you have 20% down. We know, you can buy a house with nothing down. Run the numbers, though, and that 20% down payment you bring to the table makes a huge difference in the amount of interest you pay over the years
  • Get a fixed rate. You’re better off that way. If recent events haven’t convinced you that ARM rates aren’t such a good idea, there’s probably not a pearl of wisdom in all the world that would. Suffice it to say there’s something to be said for predictability. Previous generations knew what their house payments were going to be and were able to plan other things around them.
  • Stay in the house. Our generation seems to get hot feet and feel the need to move every five to seven years out of principle. Stop it. A house is not a good investment (assuming a 30 year mortgage) unless you live in it for 20 years or more.

Photo via sanjoyg

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Is Home Ownership Right for You? http://www.homeownersinsurance.org/is-home-ownership-right-for-you/ http://www.homeownersinsurance.org/is-home-ownership-right-for-you/#respond Wed, 30 Jun 2010 13:49:09 +0000 http://www.homeownersinsurance.org/?p=696 Many will tell you that home ownership is a big part of the American Dream. Some even claim that it is the American Dream. And for many, it remains true. That little piece of ground you can call your own somehow makes life more worthwhile for many, despite the costs of a mortgage, homeowners insurance, property taxes, and upkeep.

For others, however, home ownership is seen as just another bill, or, more accurately, series of bills. And these bills come attached with what amounts to a second job, keeping the household running.

No one would argue that buying a home makes more sense on paper in most cases. If you can afford the mortgage payments, the very fact that you build equity and, at the very least, can sell the home when you’re ready to move, recovering most of what you put into it is a major reason to consider buying instead of renting.

But, that’s also the rub. In today’s housing market, there are no guarantees that you will recover everything that you put into your home. The days of buying property with the virtual promise that the value would be going up every year are gone, at least for the foreseeable future. With falling property values common in many parts of the country, you may even lose some of your investment if you need to sell, especially if you need to sell in a hurry.

And, in today’s uncertain economic times, with an unpredictable job market, selling in a hurry might very well be necessary. Renters enjoy a good deal more flexibility when it comes to pulling up stakes and moving to a new community as job prospects and offers become available.

So, should you rent or should you buy? Nobody can really answer that but you, but here are a few tips:

  • Don’t buy a home unless you’re sure you want to live in the area. It can be better to spend some money in rent than to be tied to a mortgage in an area of the country you don’t want to live, especially if property values aren’t rising there.
  • Educate yourself on mortgage terms before buying. Recent news should be an eye opener, but unfortunately, many people haven’t spent the time really figuring out what the various terms mean, and how different types of home loans could affect them.

  • Stay within your means. Whether you are renting or buying a home, your total housing costs, including upkeep and maintenance, taxes, renters or homeowners insurance and more should not exceed 25% of your gross income. Spending more on a home is a recipe for foreclosure at worst, and migraines at best.

In short, if you can afford it, plan on sticking around, and want to own a home, buy. If you’d rather avoid being tied to an area, or the extra work that goes into owning a home, rent. It’s ultimately up to you.

Photo via Chad Jones

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Good Headaches: Keeping it in Perspective http://www.homeownersinsurance.org/good-headaches-keeping-it-in-perspective/ http://www.homeownersinsurance.org/good-headaches-keeping-it-in-perspective/#respond Mon, 28 Jun 2010 13:49:04 +0000 http://www.homeownersinsurance.org/?p=691 Anyone who thinks home ownership doesn’t come with a price, both to your checkbook and your sanity, has probably never owned a home. That, or they’re in an income bracket where they can afford to buy a home where things seldom break down, and stroke a check whenever they do. The extra expenses many fail to consider when buying that first home, such as taxes, homeowners insurance, utilities, and upkeep, may be a trifling matter to them.

For most of us, however, owning our first home comes with a few headaches we probably didn’t expect. Most of us anticipate having to do a little painting, or some light maintenance work, but the first time a pipe bursts, leaving the basement flooded (or worse, if you don’t have a basement) can be a real shock to the system.

And unless you’re name starts with Bob and ends with Villa or “the builder”, it can cause a certain strain on your checkbook as well. To make matters worse, these kinds of sudden and necessary repairs don’t generally give you the courtesy of any advance warning. When the sewer backs up or the roof starts to leak, they tend to do so at inopportune times.

Still, while you’re busy writing out checks or trying to repair the damage yourself, if you’re inclined, don’t be too hasty to want to run back to the apartment and the hassle free living you had when these kinds of repairs were someone else’s problem. As much of a hassle as home ownership can be, these really are good headaches.

In many parts of the world, and throughout most of history, land ownership was completely out of reach for all but a select few. In many places, you had to be born into land in order to own it. In other parts of the world, the government owns all of the land. Home ownership, complete with its secondary expenses such as maintenance, property taxes, and homeowners insurance is still a good concept, overall, allowing us to fully participate as co owners in this country of ours. Even those who don’t own land themselves benefit from the concept of ownership.

If you haven’t experienced the headaches of owning a home yet, get ready. They will come. But, while you’re dealing with them, remember this: even though home ownership is not always easy, you are making an investment in yourself and your family. And in the end, that feeling you get from having a little corner of this globe that belongs to you is well worth it.

Photo via eye of einstein

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The Realities of Home Ownership http://www.homeownersinsurance.org/the-realities-of-home-ownership/ http://www.homeownersinsurance.org/the-realities-of-home-ownership/#respond Thu, 01 Apr 2010 14:52:48 +0000 http://www.homeownersinsurance.org/?p=278 Most folks assume that owning a home is better than renting, for a variety of reasons. In some ways and for many folks, this is certainly true. In general, a home is going to appreciate – that is, it’s going to increase in value over time. You can’t say that about an apartment. In addition, the money you pay for your mortgage each month goes toward purchasing the home (at least, the part of the mortgage that isn’t set aside to pay the interest). So you’re making an investment, rather than paying for the privilege of living somewhere.

Still, many new home owners are surprised by the changes that come with home ownership. Along with the upside to owning your home, there are some specific sorts of things you need to deal with.

You’re the super

The first thing that often strikes folks in their first home is how often a home needs maintenance. When you live in an apartment, if your toilet needs to be snaked or if you have a leaky faucet, you call the landlord, superintendant or building maintenance department. When you’re the homeowner, you are all of those things. You need to figure out how to fix the faucet, or you need to call a plumber and pay him to fix it. Either way, it’s more complex than just calling your landlord.

On a positive note, it means you don’t ever have to wait around for your landlord. You can fix that leaky faucet on your own timeframe.

Utilities are expensive

So, you bought a beautiful, 100 year-old farm house out in the country along with 10 acres to play on. That’s wonderful. Then, you get your first electric or gas bill and you almost feint. That house may have character, but it also has had 100 years to settle, to develop small leaks where heat can get out, and probably has some really inefficient energy management.

In addition, you’re going to pay more for utilities in a house because it’s going to be bigger than an apartment. There are more lights to leave on, and more rooms to heat or cool. Even your homeowners insurance will be more expensive than your renters insurance.

Yard work is hard work

You may have dreamed of having a flower garden, and now you do. Unfortunately, you’re surprised by just how much work it takes to keep it up. In addition, two acres may not look like a lot of land, but when you’re trying to mow it with a push mower, You’re talking about a 10 to 12-hour project. Yard work, sadly, is par for the course with home ownership.

Is home ownership worth it? Sure. You just need to think long and hard about what you’re getting into so that you’re not surprised in those first few weeks and months.

Photo via SolYoung

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Is Home Ownership Overrated? http://www.homeownersinsurance.org/is-home-ownership-overrated/ http://www.homeownersinsurance.org/is-home-ownership-overrated/#comments Tue, 26 Jan 2010 19:09:12 +0000 http://www.homeownersinsurance.org/?p=186 castleThere was a time, thankfully long past, when owning land meant you were a member of the elite in society. The “landed gentry” were the ones who made the rules, who owned the means of production and who had the most rights. Home ownership was more than just a status symbol or an investment. Owning a home meant that you led a different, more privileged life. Home owners were first class citizens, while those that rented were living their life in coach.

Today, that’s changed. Some of the most powerful and wealthy people on the planet don’t own homes. They simply rent apartments or homes all over the world. You can be the most successful person in the country today, and whether or not you own a home has no bearing on your success.

So, why own a home? For status’ sake? Perhaps there is still some pride in owning your own home, as opposed to renting. Homes as investments are iffy right now, at best.

Here are some reasons home ownership may be overrated, and why it may be disappearing:

  1. Maintenance and care. In today’s society where most families have two working parents, finding the time to keep up the home and yard can be a challenge. Most people who own more than an acre or so are likely to hire someone else to mow their lawn, for example. While gardening may be cathartic and something you enjoy, the basic activities involved in home care can be a drag.
  2. Homeowners insurance. The fact is that renters insurance is a heck of a lot cheaper than homeowners insurance. If disaster strikes and you lose your house, you can lose some of your equity depending on home values. If disaster strikes and you lose your apartment building, you can replace your stuff and move into a different apartment building.
  3. Home ownership doesn’t make you any happier. A recent study supports the idea that owning a home doesn’t necessarily reflect a happier life or one of a higher quality. You can be just as happy renting as you can if you own a home.
  4. Home ownership doesn’t provide stability to a society. Take, for example, Switzerland. Home ownership is at around 35 percent in Switzerland, yet the country doesn’t seem to be about to fall apart.
  5. Homes are no longer secure investments. It used to be that the home was a person’s biggest investment and largest source of savings. The housing crash has taught us all that this isn’t necessarily the case.

Photo via PhillipC

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