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Owning a Home Can Change Your Life


When you’re considering purchasing your first home…it can be overwhelming.

Overwhelmed surrounded by houses
It can also be life-changing.

Life-changing in a very positive way.


The biggest hesitation I hear from first-time homebuyers is financial based. Either doubt whether they can make the payments…or they don’t think they have enough saved up for a down payment….among other things.


A really surprising thing was that when we purchased our first house (essentially doubling what we paid for rent once you add principle and interest and taxes for the monthly note), I actually felt that I was more financially secure.


I was actually building wealth. And, I could feel it.


And, I don’t mean wealth in the sense that I could go spend frivolously on fancy clothes and dinner. Actual wealth, financial security, a safety net, something of actual value. Experts agree that the best way to gain wealth is through real estate.


Shopping bags

In a weird way, owning a home helped make me a much more contentious spender…which is better for the environment and my wallet. We all have our vices and poor choice habits…mine are pizza (despite the fact that dairy upsets my stomach) and junk jewelry. When I was renting, it was easy to think my expendable income should go to some short-term joy because I “earned it” and I didn’t have any real responsibilities. And, I was going to move in a year or so, so I’d just plan to purge my junk at that time, so it was ok to impulse buy. That junk jewelry was for right now…it was going to be in a landfill in a few years tops. No consequences!


Now, I’m much more aware of the things I put in my home. I don’t plan on moving anytime soon and therefore have a finite amount of space and no pressing move to unemotionally toss all my extra stuff. The easiest way to avoid a cluttered house is to not purchase the stuff in the first place (hence: better for wallet and environment!). Owning a home also helps you grow up a bit. Not that one should loose their childlike sense of joy and fun, but I am able to prioritize what I really want. It helps you prioritize quality over quantity, I’m willing to save up and do/get something really nice for the house or myself because I have a longterm mindset now. It really helps me only purchase things that I really love or need.

Now, the responses to the buyer hesitations:


Maybe because I’m one of the Millenials that graduated in the midst of a recession, but it helps me to consider the worst case scenarios when it comes to finances. When picking apart what I view could be the “worst,” I often realize it’s all manageable.


Making the payments: Are you worried about making your rent payments? Why/why not? Unless you live with your parents, you will likely HAVE to spend some money each month on a place to live, why not “keep” that money in your future rather than giving it to someone else in the form of rent…ensuring that you will NEVER see it again.

wallet

Ok, and I get it…life is unpredictable, bad things and hard times can happen to good people. But, the worst case scenario is that you can always sell the house. And, even if it’s sold at a loss, it might not be the worst thing.


We use this example with clients that purchase townhomes. In Houston, townhomes don’t tend to appreciate as fast as a single family home with a decent lot, and since they keep building new ones, consumers are less likely to want to pay a premium for a “used” one.

The super simplified math:

You buy a 3/2.5 town home for $350,000

You sell it in 3 years for $345,000

It costs you 6% to sell it : $20,700

Total “loss” $25,700

So, that’s what it “cost” you to live in your house for 3 years

So you “rented” that house from yourself for $713.89 a month

$713.89 A MONTH

Just TRY and find a 3/2.5 anywhere in the city for that price. You can’t do it. It doesn’t exist.

And yeah, this is a scary scenario…but you still came out ahead financially in the long run AND you enjoyed tax breaks for 3 years while owning the home! And, what if you rented out a room or two? There are ways to almost "live for free" while having someone help pay your note.

Not enough downpayment: Most of the time buyers don’t realize that there are conventional financing options for as little at 3-5% down. So using our town house example, you could be purchasing with a down payment of 3% ($10,500) vs the traditional 20% ($70,000). BIG difference.


Money

And, yes. A bigger down payment means a smaller monthly note. Also, less than 20% also means you’ll have to pay Private Mortage Insurance (PMI) which, honestly is bullsh*t in my opinion. Let’s be honest: its a poor tax for not having enough money to put down.


But, all anger aside, getting into a house, paying yourself rent that you would have paid someone else, and getting the tax breaks…it all evens out. You are also able to get your PMI to go away once you’ve paid enough equity on the house, though you do have to notify your Mortage holder (they won’t do it automatically…sneaky, right?).


Talking to a reliable Mortage lender can really help see what purchase options are open to you.


I don’t know if I want to live here forever: We do NOT buy and sell houses like our parents did, so please, please get their mindset out of your mindset. We don’t buy a house and live there for the next 30 years anymore. People get transferred, the world is more mobile and interconnected. The better question to ask yourself is can you live here for 3 to 5 years. Of course, the longer you can stay in a house the more likely you are to make a bigger profit, but the length of time you “need” to own a home is shortening and the availability of affordable housing keeps going down. The market always has its ups and downs but the cost of houses keeps trending up overall. There's a reason there's they old joke goes "the best time to buy a house was five years ago."


Another GREAT option is to NEVER sell it! Now, I know not everyone has this luxury, but if you are in the position to not sell in order to buy the next one, renting the first house out is a brilliant option. Let someone else pay your note and when you are ready to sell, you’ll have much more paid off with potential greater profit for you…it’s a solid retirement plan.

Owning a home is going to be hard and expensive: There are definite maintenance costs and tasks to owning a home. But, there are SO many great options out there to help you along. We pride ourselves on being a continued resource for our clients long after the purchase of their home, we have a great list of reliable contractors for almost anything you may need, so having the right Realtor is really a way to calm this fear.

Tools

Have you heard of YouTube? OH. MY. GOSH. We love YouTube, you really can find almost anything you need if you fancy yourself DIY capable. Pro tip: watch 3 different people’s videos for the same task, between the 3 you’ll be able to discern the one that will really work for your situation.


Want even more security? You can purchase a home warranty. Now, we all know warranties are hit or miss with coverage, but for several hundred dollars a year you can at least have a direct number to call if something breaks and, if you’re lucky, it will be covered and you’ll just pay a small fee per visit.

House Key

Still not convinced?

There are so many ancillary benefits that are never talked about:


Personal security: Homeowners are more likely to get to know their neighbors than renters. The homeowners on my block all look out for each other and take care of each other, there’s a long term reciprocity mindset built in…we’re going to watch each others packages, share camera footage, alert each other to suspicious circumstances. I’ll got a phone call one time when a friend went into my backyard that my neighbors had never seen before... just making sure a stranger wasn't wandering around my house.

Neighborhood Watch

Community and belonging: It’s human nature to want to fit in and feel that you belong. A shared community with like-minded individuals is essentially built in with your neighbors. They are financially invested in the property and neighborhood, so they tend to treat it better than what a renter may (not trying to pick on anyone!). But, you’ll have a built-in common goal. Better neighborhoods, better return on your investment. A common goal is unifying and it’s a unifier that’s not polarizing like politics or religion…EVERYONE can get behind safer, nicer, cleaner neighborhoods.


Self expression: We often find renters are pickier about the house than a buyer may be because a renter can’t change anything. It’s much easier to put your own stamp on something you own, you can make the right design choices for you and invest in better or more stylish furniture and art knowing that it’s longer term.

Before and after kitchen remodel


Tax benefits: Now, I’m no accountant so I can't explain it….and it sounds and feels like magic but I honestly feel wealthier owning a home, maybe a combination of all the above mentioned items, or now I just have so much to write off, but owning a home has really been a super-positive, life changing experience.

Calculator


Just remember, it’s never too soon to start thinking about homeownership, even if you think you’re a few years out. We are always happy to meet with someone considering home-ownership and go over the process and steps to get you to your goals. It’s been a very positive experience for us to own a home and we would love to help everyone achieve that benefit if possible.


We'd love to have a chat with you.


Conversation and coffee


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