Homeownership – Is it Still the American Dream?
To own a home or to resist?
This is the question many Southwest Floridians are asking themselves, as their experiences with homeownership went from a dream to a nightmare. These days more and more people are asking themselves if perhaps it’s better to be a renter.
Obviously, homeownership has some advantages. As the saying goes, money spent on rent is money down the drain. Depending where you are in your repayment period of your loan and the type of loan you have will determine how much of your payment is going to principal and how much is going to interest. In the beginning of a thirty year conventional loan, many individuals are paying about 90 percent interest or more monthly. As time goes by, more and more of the payment goes toward the principal; however, homeowners pay a significant amount of interest over the course of their loan.
Many Americans get to “write off” the interest on their taxes. This is still not enough to sway my opinion on this issue though. Paying a dollar in interest to save something like twenty-nine cents is not my idea of a good deal.
Maintenance and property taxes is another issue. I’ve never understood how people can say they own their home when they must pay property taxes. I spoke with a gentleman who owns his home without a mortgage (no debt), yet his property taxes were over $10,000 per year. That’s $192 per week of tax dollars just to live in his house. The maintenance was probably another couple of hundred dollars a month. So that’s $242 a week of after-tax dollars just to live in your home.
On the other side of the argument, homeownership does promote stability, and if there was a way to calculate the emotional cost of homeownership, it would bring down the costs all around. What is a good night’s sleep worth? What is it worth to know your family feels safe and secure? To me, this cost of homeownership is well worth it. I rented before I was married, and I’ve owned a few homes. It’s neither here nor there for me—but I do worry about my family. So when you weigh the pros and cons (and I’m sure there are many other considerations that I didn’t discuss), it looks like homeownership should still be on everyone’s wishlist.
After blasting homeownership long enough, let’s talk about the pros and cons of renting. The pros are obvious. If something breaks, call the landlord. If the lawn needs trimming, call the landlord. You get the picture. On the flip side, what if the landlord isn’t paying his or her mortgage with your rent money? It will only be a matter of time before you, the renter, receive a copy of the foreclosure papers. This usually comes as quite a surprise to the renter who has been paying diligently.
After the initial shock and anger of the homeowner breaking his agreement subside, the renter has some decisions to make. First, do they move immediately, or do they ride it out and not pay the rent? Second, what if something is broken? Should they fix it themselves or let it go? What if the plumbing is bad? Third, do they call the landlord about any of the maintenance issues? And if so, can they trust what he says?
Last, as a renter, you are always faced with the difficult decision of moving—again. For me, the moving process rates up there with having my toenails pulled off one at a time with pliers. I cannot stand the thought of moving.
Ultimately, my decision is to stay where I am and suck it up. What’s yours?
This post was submitted by Carmen Dellutri, Esq., founder of The Dellutri Law Group, P.A. Currently, the firm has offices in Port Charlotte, Fort Myers, Naples. Mr. Dellutri also sits on the Board of American Board of Certification. Mr. Dellutri is also one of the founders of the Bankruptcy Law Network, Debt Law Network, Credit Law Network, and Mortgage Law Network. Mr. Dellutri also writes for the firm's personal injury litigation blog, www.faircreditreportingactblog.com and www.fairdebtcollectionpracticesactblog.com, and the firm's mortgage modification blog.