In the US, we all very much promote the “American Dream” – you know, a house in the suburbs with a perfectly manicured lawn and a dog that brings the morning newspaper.
While I am totally in favor of having a helpful canine companion, owning a home is simply not on my agenda – at least not soon. Despite the cultural drive for home ownership, I simply disagree with the idea that owning a home is the right financial move for my family.
Here are three main reasons I plan to rent out for the foreseeable future.
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1. Buying a house is expensive
Almost every aspect of buying a property means spending your hard-earned money. The most obvious cost is advance payment…
Unless you are sitting on a big pile of money, you probably need mortgage buy residential property. For the best chance of approval, the best interest rates and the lowest mortgage fees, you need a down payment of at least 20%.
V average price home in the US is nearly $ 300,000. And 20% of $ 300,000 is $ 60,000. it many just transfer money to the bank.
If it is convenient for you to pay mortgage insuranceyou can probably get by with a smaller down payment. But even if you shell out only 5%, it’s still $ 15,000 in cash that you need to find – and be financially stable enough to do without it.
Your down payment is just the tip of the iceberg when it comes to loans. During the 30-year term of the mortgage, you can pay six figures of interest.
There are many other fees and expenses that are part of buying a home. For example, having its potential new house inspected before the purchase. You will probably also need a property appraisal.
And let’s not forget closing costs…
2. Possession house is expensive too
No matter how expensive it is to buy a house, possession real estate can be the same, or even more expensive. First, there are property taxes. Even the most tax-hating states in the union have property taxes, and you are responsible for paying them even after your mortgage has expired. Heck, you don’t even need any buildings on your property to be on the tax hook.
The amount of real estate tax depends on the state and county in which your property is located. They are usually based on the appraised value of your property, and this appraisal is done by your city or county. On average, a single-family home was billed for property tax of $ 3,719 in 2020… It turns out that it will be over $ 300 per month.
If you live in a condominium, townhouse or area with homeowners’ association (HOA), be prepared for additional fees. In some cases, it could be $ 50 a month for a nearby tennis court or $ 300 a month for maintenance and landscaping.
And speaking of maintenance, be prepared to learn how to repair, well, pretty much everything – or pay someone to do it for you. When you own a home, a broken refrigerator means you call in (and pay) a repair technician. It’s the same with the clogged toilet, the dying stove and this raccoon in the attic. Maintenance and repairs can easily add to several thousand a year…
3. Selling a home is also expensive.
So not only does it cost a fortune to buy house, it could also cost a royal ransom, just to own one. But your expenses don’t end there. You will also pay to get rid of the house when you’re done with it.
Most homes are nearly impossible to move (with the exception of mobile homes, which have their own problems). If you want to move, you need sell your property… And the sale of a house, you guessed it, expensive…
In most cases, you need a real estate agent to help you sell your home. It can be 4% or even 6% of the value of your home. An agent can help you get a higher price for your home to cover that commission, but that’s not a fact.
Even if you choose the “do it yourself” option, you will have to pay plus taxes for completing the necessary documents. And this is up to the cost of any repairs to bring the property back to its proper shape.
When all is said and done it can cost 10% the value of your home in order to sell it to someone else. And we did not go into the time spent preparing, listing and demonstrating what is involved in selling real estate.
Basically, no matter how you cut it, your own home will cost you. While renting is not entirely free, it just makes more financial sense to me now than buying a home. But I’m still for the dog.