Blog :: 2019

The True Cost of Not Owning Your Home

The True Cost of Not Owning Your Home | MyKCM - Family with their Children
 

There are great advantages to owning a home, yet many people continue to rent. The financial benefits are just some of the reasons why homeownership has been a part of the long-standing American dream.

Realtor.com reported that:

“Buying remains the more attractive option in the long term – that remains the American dream, and it’s true in many markets where renting has become really the shortsighted option…as people get more savings in their pockets, buying becomes the better option.”

Why is owning a home financially better than renting?

Here are the top 5 financial benefits of homeownership:

  1. Homeownership is a form of forced savings.
  2. Homeownership provides tax savings.
  3. Homeownership allows you to lock in your monthly housing cost.
  4. Buying a home is less expensive than renting.
  5. No other investment lets you live inside of it.

Studies have also shown that a homeowner’s net worth is 44x greater than that of a renter.

A family that purchased a median-priced home at the start of 2019 would build more than
$37,750 in family wealth over the next five years with projected price appreciation alone.

Some argue that renting eliminates the cost of taxes and home repairs, but every potential renter must realize that all the expenses the landlord incurs are already baked into the rent payment – along with a profit margin!

Bottom Line

Owning a home has many social and financial benefits that cannot be achieved by renting. Let’s connect to determine if buying a home is your best move.

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    How to List Your Home for the Best Price

    Home vs. Money with Gray Hands

    If your plan for 2019 includes selling your home, you will want to pay attention to where experts believe home values are headed. According to the latest Home Price Index from CoreLogic, home prices increased by 4.7% over the course of 2018.

    The map below shows the results of the latest index by state.

    United States Map with Different Colors and Actual Percentages for the Year-Over-Year Change in Price

    Real estate is local. Each state appreciates at different levels. The majority of the country saw at least a 2.0% gain in home values, while some residents in North Dakota and Louisiana may have felt prices slow slightly.

    This effect will be short lived. In the same report, CoreLogic forecasts that every state in the Union will experience at least 2.0% appreciation, with the majority of the country gaining at least 4.0%! The prediction for the country comes in at 4.6%. For a median-priced home, that translates to over $14,000 in additional equity next year! (The map below shows the forecast by state.)

    United States Map with Different Colors and Forecasted Percentages for the Year-Over-Year Change in Price

    So, how does this help you list your home for the best price?

    Armed with the knowledge of how much experts believe your house will appreciate this year, you will be able to set an appropriate price for your listing from the start. If homes like yours are appreciating at 4.0%, you won’t want to list your home for more than that amount!

    One of the biggest mistakes homeowners make is pricing their homes too high and reducing the price later when they do not get any offers. This can lead buyers to believe that there may be something wrong with the home, when in fact the price was just too high for the market.

    Bottom Line

    Pricing your home right from the start is one of the most challenging parts of selling your home. Once you decide to list your house, let’s get together to discuss where home values are headed in your area!

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      How to Save Money for a House Without (Too Much) Sacrificing

      Fake Home with Dollar Bill and White Piggy Bank

      When you're wondering how to save money for a house, it can start to feel like you'll never scrape together enough for a down payment. Yeah, you already know that Rome wasn't built in a day. Well, the same holds true for building a down payment. It takes time!

      How to save money for a house

      Still, as long as you grease the gears early (like now), you'll barely notice you're saving until—boom!one day in the foreseeable future you'll be sitting on a pile of money that could pave the way to homeownership. Sound good? Good. Here's how to get started.

      Trim those quiet, unnecessary expenses

      OK, let's shift those preconceived notions. Contrary to popular belief, the answer to how to save money for a house isn't mostly about grueling sacrifice—e.g., holing up in your apartment under a bare light bulb, eating ramen, and piggybacking off your neighbors' Wi-Fi.

      “It's about a lifestyle change," says Travis Sickle, a financial adviser with Sickle Hunter Financial Advisors in Tampa, FL. A more sustainable strategy, he says, is to pinpoint your silent money siphons that you barely notice. Odds are you could try some of the following cost-cutting measures without feeling the pinch:

      • Replace your $250 monthly cable service with a $10 Netflix standard streaming account, and you'll save $2,880 per year.
      • Cut that languishing gym membership—at $50 per month, you'd save $600 a year. Go running instead!
      • Packing lunch will save you about $60 a month—or $720 a year.
      • Bike to work. For a 10-mile commute, biking can save you around $5 a day, according to Kiplinger—or $1,250 a year.
      • Start a coin jar. Saving all your loose change can have a big impact—up to $700, according to financial blogger J.D. Roth.
      • Turning down your thermostat just 3 degrees could shave almost 10% off your electrical bill, netting you $20 a month on a $200 bill, or $240 a year.
      • Curb those dinners and drinks out at restaurants, which can quickly add up. If you typically shell out $40 three times a week, reduce that to one evening a week, and you'll save $80—or $4,160 per year. (Bonus: It'll make those times you do indulge more special!)

      And if you and your significant other team up and try all of the above, that would amount to $10,550 per person, or $21,100 in one year's time. Just remember that when you're thinking of ordering a second glass of artisanal craft beer.

      Open a dedicated account

      If you don't have a savings account, now's the time to open one. A checking account is great for daily expenses, but when it comes to saving money—well, they don't call them savings accounts for nothing. You'll earn interest on your balance, plus there's a lot to be said for the mental benefit of having a specific place to stash your down payment. While interest rates haven't been very impressive in recent years (though, you'll be grateful for that when it comes time to get a mortgage), it's still great to have a dedicated account where you can see how you're progressing toward your goal.

      Financial planner Bob Forrest of Mutual of Omaha points out that CDs and money market accounts offer higher gains than savings. You'll need a larger minimum balance than for a regular savings account, but your goal is to make it grow, not shrink, right? If you're using a CD, just make sure you don't withdraw the money before the time is up or else you'll face some stiff penalties.

      Automate your savings

      If you're struggling to put enough money away because of the constant temptations to blow your paycheck, consider automating the process. Ask your employer if you can have your paycheck deposited into multiple accounts—if so, instruct it to send a certain percentage of your salary directly into your savings account. Or go through your bank, setting up automatic withdrawals from your checking to savings account that will force you to keep spending in check.

      Tap into your IRA

      Another great place to stash your cash? A traditional or Roth IRA, says Forrest. In addition to being a tax-friendly retirement vehicle, it allows you to withdraw up to $10,000 for a home. While withdrawals from a traditional IRA will be taxed, a Roth IRA you've owned for more than five years won't be taxed at all, as long as you're a first-time home buyer. Just be careful with this method, though, as you will be denting your retirement funds. But combined with other savings, it can quickly add some heft to your growing nest egg.

      Check out down payment assistance programs

      Depending on the city and state you live in, you may be eligible for down payment assistance programs, which provide money to help people buy a home. Most offer up to $15,000, typically in the form of a grant or low-interest loan. Most require your income to be below the area median. But even if you make more, do your research—there are programs that provide funds for higher-income households.

      If saving up for a down payment is a challenge, it may surprise you to know that you don't always need to save 20% for a down payment. With certain kinds of loans, you can get away with a down payment as low as 3.5% (for FHA loans) or even 0% (USDA loans). Here's more on how to buy a home without 20% down.

      Once your down payment is on a roll, it's time to start looking for a home—and to do that, you'll need to determine exactly how much house you can afford.

      ——

      Check out our First-Time Home Buyer Resource Center for more tips to help you through your home-buying journey.

       

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        How Much Has Your Home Increased in Value?

        During 2018, home values increased nationally by over 5%! If you are planning on selling your home in 2019 you may be pleasantly surprised by how much your home has appreciated! Every market is different. Let's get together if you are curious just how much your home has gone up in value!

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