本文发表在 rolia.net 枫下论坛To rent or to buy. The question almost always is answered with an automatic "buy." But as a new homeowner with a bleeding bank account, there are days I wish I were still a renter.
Owning your own home is supposed to be the cornerstone of the American dream. I don't deny that there are great advantages to owning. You get your very own property in what's hopefully a nice neighborhood and a good place to raise your family. You can decorate the place however you like, and you don't have to worry about what whether the landlord likes your choice of paint or wallpaper. You can have dogs, cats, and other assorted pets without breaking any rules. And with luck, you live far enough away from your neighbors that they'll never complain that your stereo is too loud.
And there are financial advantages, too. If you carry a mortgage, you'll have some great tax deductions come April 15, from both deductible mortgage interest payments and real estate taxes. Paying down a mortgage also is a kind of forced savings plan. In the beginning, the majority of what you pay is interest, but eventually you start paying down the principal and building equity in your home. If you bought your home at a good price, hopefully its value will go up and you'll realize a profit.
What am I complaining about? Well, the money. Despite the deductions, your home, whether it's new construction or 100 years old, can be a money pit. And taking care of your humble abode can be so time-consuming that the American dream can turn into a nightmare. Here's a look at some of the pitfalls, financial and otherwise.
The many pitfalls of owning a home
1. Coming up with a down payment. Before buying a home, you usually have to come up with a down payment. That means tying up thousands of dollars when you purchase your home. If you'd chosen to rent instead, that down-payment money could be multiplying in a growth mutual fund or other investment. Despite the booming housing market, you'd probably earn more on your money in stocks than in real estate.
2. Closing costs can be pricey. When you buy, you have to prepay some taxes, pay attorney's fees, pay for a title search and title insurance, prepay a year's worth of homeowners insurance, and more. That's more lost income on money that could otherwise be percolating in a mutual fund.
As a renter, you'd have to shell out only the first and last month's rent, and maybe a security deposit. And you'd probably have a lot more available cash on moving day.
3. Upkeep. If you're an owner, as soon as you get into your house, the maintenance costs begin. It will cost you lots of time if you take care of things yourself, or it will cost lots of money to hire someone to maintain your house for you. There's lawn care, remodeling, and dealing with things that need periodic replacement, like installing a new roof or repaving the driveway. Those are expenses you'd never incur as a renter. Owning also means that your budget has to be a lot more flexible than if you were renting because you'll have to be prepared for the unexpected, like when the basement floods or a tree falls on the garage.
As a renter, you have virtually no maintenance costs. If something breaks, you call the landlord to fix it. Someone else cuts the grass, cleans the gutters, weatherstrips the windows. That means you can spend your free time doing anything you want. And you can take the money you'd have been spending on home maintenance and invest it.
4. Moving. If you get a new job and need to relocate, or if you decide to move for other reasons, it's not that easy when you own a home. There are more costs to contend with. Unless you sell your home yourself, you'll have to pay a real estate agent a commission of about 6% of your home's sale price. And you may have to wait a number of weeks or even months for your home to sell before you can move on and find a new place to live. If you're moving for a new job, you may have to start right away, carrying your old mortgage plus paying a new mortgage or rent until your old house sells.
If you're a renter, once you give the appropriate notice, you can basically pack your bags and split. It won't cost you anything, unless you've trashed the apartment or house you were renting.
I've been a homeowner for only six months, and already I've spent thousands of dollars beyond my closing costs and down payment. Some of the costs were for improvements for which I may see some return on my money when I sell someday, but most of the expenses, unfortunately, I won't ever recoup.
So why do I do it? I guess it's because it's what I was raised to do.
I grew up in a suburban town in a house that my parents bought when I was less than a year old. They still live there today. When I return home to visit, my old room is just as I left it (okay, it's a little cleaner than I left it, but other than that, it's the same).
When I walk in, I'm flooded with all the memories of the past 30 years of Christmases, birthdays, and family gatherings. The tree I fell out of (and nearly broke my nose on the way down) is still standing. The flower-filled yard I stood in, posing for photos on my Sweet Sixteen birthday, on my high school graduation day, on my college graduation day, on my wedding day, looks the same.
I don't know if this house is the one I'll still be living in when my daughter is grown and starting a family of her own, but I love the idea of giving her, and any other children who come along, a place filled with the same kinds of memories I have when I go to my parents' house.
Does it make financial sense? Probably not. This house will likely mean I'll have a smaller retirement fund—and my daughter a smaller college fund—as I spend money on the house instead of investing it. But I'm hopeful my daughter will grow up to appreciate her memories more than her bank account.
How can you put a price on that?
Karin Price Mueller is the author of Online Money Management (Microsoft Press, 2001).更多精彩文章及讨论，请光临枫下论坛 rolia.net
Owning your own home is supposed to be the cornerstone of the American dream. I don't deny that there are great advantages to owning. You get your very own property in what's hopefully a nice neighborhood and a good place to raise your family. You can decorate the place however you like, and you don't have to worry about what whether the landlord likes your choice of paint or wallpaper. You can have dogs, cats, and other assorted pets without breaking any rules. And with luck, you live far enough away from your neighbors that they'll never complain that your stereo is too loud.
And there are financial advantages, too. If you carry a mortgage, you'll have some great tax deductions come April 15, from both deductible mortgage interest payments and real estate taxes. Paying down a mortgage also is a kind of forced savings plan. In the beginning, the majority of what you pay is interest, but eventually you start paying down the principal and building equity in your home. If you bought your home at a good price, hopefully its value will go up and you'll realize a profit.
What am I complaining about? Well, the money. Despite the deductions, your home, whether it's new construction or 100 years old, can be a money pit. And taking care of your humble abode can be so time-consuming that the American dream can turn into a nightmare. Here's a look at some of the pitfalls, financial and otherwise.
The many pitfalls of owning a home
1. Coming up with a down payment. Before buying a home, you usually have to come up with a down payment. That means tying up thousands of dollars when you purchase your home. If you'd chosen to rent instead, that down-payment money could be multiplying in a growth mutual fund or other investment. Despite the booming housing market, you'd probably earn more on your money in stocks than in real estate.
2. Closing costs can be pricey. When you buy, you have to prepay some taxes, pay attorney's fees, pay for a title search and title insurance, prepay a year's worth of homeowners insurance, and more. That's more lost income on money that could otherwise be percolating in a mutual fund.
As a renter, you'd have to shell out only the first and last month's rent, and maybe a security deposit. And you'd probably have a lot more available cash on moving day.
3. Upkeep. If you're an owner, as soon as you get into your house, the maintenance costs begin. It will cost you lots of time if you take care of things yourself, or it will cost lots of money to hire someone to maintain your house for you. There's lawn care, remodeling, and dealing with things that need periodic replacement, like installing a new roof or repaving the driveway. Those are expenses you'd never incur as a renter. Owning also means that your budget has to be a lot more flexible than if you were renting because you'll have to be prepared for the unexpected, like when the basement floods or a tree falls on the garage.
As a renter, you have virtually no maintenance costs. If something breaks, you call the landlord to fix it. Someone else cuts the grass, cleans the gutters, weatherstrips the windows. That means you can spend your free time doing anything you want. And you can take the money you'd have been spending on home maintenance and invest it.
4. Moving. If you get a new job and need to relocate, or if you decide to move for other reasons, it's not that easy when you own a home. There are more costs to contend with. Unless you sell your home yourself, you'll have to pay a real estate agent a commission of about 6% of your home's sale price. And you may have to wait a number of weeks or even months for your home to sell before you can move on and find a new place to live. If you're moving for a new job, you may have to start right away, carrying your old mortgage plus paying a new mortgage or rent until your old house sells.
If you're a renter, once you give the appropriate notice, you can basically pack your bags and split. It won't cost you anything, unless you've trashed the apartment or house you were renting.
I've been a homeowner for only six months, and already I've spent thousands of dollars beyond my closing costs and down payment. Some of the costs were for improvements for which I may see some return on my money when I sell someday, but most of the expenses, unfortunately, I won't ever recoup.
So why do I do it? I guess it's because it's what I was raised to do.
I grew up in a suburban town in a house that my parents bought when I was less than a year old. They still live there today. When I return home to visit, my old room is just as I left it (okay, it's a little cleaner than I left it, but other than that, it's the same).
When I walk in, I'm flooded with all the memories of the past 30 years of Christmases, birthdays, and family gatherings. The tree I fell out of (and nearly broke my nose on the way down) is still standing. The flower-filled yard I stood in, posing for photos on my Sweet Sixteen birthday, on my high school graduation day, on my college graduation day, on my wedding day, looks the same.
I don't know if this house is the one I'll still be living in when my daughter is grown and starting a family of her own, but I love the idea of giving her, and any other children who come along, a place filled with the same kinds of memories I have when I go to my parents' house.
Does it make financial sense? Probably not. This house will likely mean I'll have a smaller retirement fund—and my daughter a smaller college fund—as I spend money on the house instead of investing it. But I'm hopeful my daughter will grow up to appreciate her memories more than her bank account.
How can you put a price on that?
Karin Price Mueller is the author of Online Money Management (Microsoft Press, 2001).更多精彩文章及讨论，请光临枫下论坛 rolia.net