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5 Advantages of Buying A Home Instead of Renting

Bridge to Own® | 0 comments | by newman

5 Advantages of Buying A Home Instead of Renting

Here are some advantages of buying a home instead of continuing to be a renter:

There are many advantages to buying a home instead of being a renter. It’s key to achieving the American Dream. An overwhelming majority of Americans still believe that buying a home is a key part of living the American Dream. More than ever, though, Americans also see that dream as increasingly unattainable. Rising house prices in big metropolitan areas make owning a home even more financially difficult than it was 20 years ago. This has led many Americans to choose to rent a house over buying.


Despite this, many Americans still want to own a home. According to the 2018 Bank of the West Annual Study, 57% of Americans still believe the American Dream of owning a home can be achieved. Millennials, in particular, are skeptical of achieving the dream, but the majority of millennials still aspire to own their own home.


Should you buy a home instead of renting? It depends on your finances and your lifestyle, but here are the top five reasons Americans want to buy a house instead of renting.


Written by Matt Lavinder, President of New Again Houses®


buying a home vs renting


#1 To Feel A Sense of Stability


Studies consistently link the stability of an individual’s happiness and children’s financial future with the stability of their home. This certainly isn’t the only indicator of success for children, but few would deny its significance. Plenty of families provide stability in rental housing but renting ultimately leaves another party in ultimate control of your home.


#2 It Makes More Financial Sense Than Renting


Many renters grow weary of “throwing money away every month”. They equate paying rent with a transfer of wealth from the renter to the landlord. In many ways, this is true. But, it’s also more complicated than that.


Owning a home involves “throwing some money away”, as well. Property taxes, homeowner’s insurance, mortgage interest/insurance, and maintenance are all expenses involved in owning a home. These are the reasons landlords aren’t putting as much of your rent in their pockets as you would imagine. In reality, most of the rent you pay goes toward the cost of their ownership. A common rule of thumb for landlords is that 50% of the rent goes toward non-mortgage costs of ownership and most of the remaining 50% goes toward mortgage payments and interest.


So, how is your landlord winning? The answer is wealth. While most landlords aren’t pocketing income from your rent payment, they are accumulating wealth as you pay off your landlord’s mortgage. After 20 years, the renter has zero equity and the landlord often has 100% equity in the house. The tenants have paid off the landlord’s property. As long as you remain a renter, you will be transferring your wealth to your landlord.


#3 So I Can Modify My Home And Make It My Own


Our home is a key part of our identity as humans. It’s understandable that we have an innate desire to make it our own. Renters often feel frustrated that they cannot paint or make improvements to their home. The endless loop of home improvement shows on television are a constant reminder of our human desire to buy a house and transform it into a home.


Of course, there are costs involved in the transformation. Many new homeowners underestimate the costs involved in making their house their own. Paint, design elements, new furniture, and landscaping can be more costly than renters expect.


#4 Want More Space


While a studio apartment might be the American Dream at 22 years old, life happens and we end up needing more space. It’s important to understand there is a direct correlation between space (i.e. square footage) and cost. Every additional foot of space, whether it’s a rental or your own home, will cost additional money in cost, utilities, taxes, and maintenance.


If you choose to acquire that additional space by buying your next house, understand that you will still have an additional cost in the form of utilities, property taxes, and maintenance costs.


#5 It’s A Good Financial Investment


The monthly costs of renting and owning aren’t that different. Mortgage payments might be a bit lower, but experts project you will spend 1% of the home’s value per year on maintenance. Add property taxes and insurance and your monthly costs of owning likely won’t be that different than monthly rent would have been. It’s the accumulation of wealth that makes homeownership a cornerstone of the American Dream and upward mobility.


If you give up some freedom of mobility when you buy a home, you give up wealth when you rent one. The standard mortgage is set up for 30 years. If you make payments for those 30 years, you will owe nothing at the end. The majority of wealth in America is made up of home equity. For generations, Americans have been able to retire because they’ve made 30 years of payments and own their homes. People in their 60’s have been able to survive on a fixed retirement income because they bought a home in their late 20’s and no longer have to pay rent or mortgages. The Baby Boomers began taking out “second mortgages” or home equity lines to fund a higher standard of living. This extends the 30 years of mortgage payments indefinitely, making retirement an elusive dream.


How can you retire on a fixed income if you spend your life renting? Rents keep increasing and retirement incomes decrease. Social security helped bridge the gap for past generations, but no Generation Xer or Millennial really expect much to be left over.


So, how will millennial renters ever retire? That’s the question with few good answers and the strongest case for buying a house rather than renting. Want to retire at 60? Buy your first home before 30 and don’t dip into the equity.


Buying And Renting Have Their Advantages And Also Their Disadvantages


There are many advantages to buying a house instead of renting. You will likely feel a stronger sense of stability and have more space when you purchase a home. In addition, buying a home is a sensible financial investment for your family and your future. However, buying a home isn’t right for everyone, and you should consider your needs and financial situation before you make a decision.

Interested in Buying A Home instead of continuing to Rent?

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3 Ways to Invest Your Tax Refund

Bridge to Own® | 0 comments | by newman

bridge to own ®, bridge to own

3 Ways to Invest your Tax Refund

It’s no question that most people would rather own a home than rent. You can choose your own paint colors, have all the dogs you want, and not have to worry about sharing walls with another family.

So what’s keeping you from buying a home?

MYTH: There’s a perfect buyer that the lenders are looking for, you have to have perfect credit, and you can’t have messed up once in your life, because if you do, a lender won’t take you.

Our advice: Don’t focus on the negative!

We love to solve real estate problems. From buying your unwanted home to helping first-time homebuyers navigate the unknowns, we love a good challenge!

We believe in investing – In your family, your future, and yourself. What could be a better investment than a fully remodeled home?

With tax refunds coming in, we think this is a great season for investing. If you’ve been thinking about purchasing a home, consider using your tax refund to help you get closer to your goal!

We know that saving your tax refund for a down payment sounds ideal, but sometimes it is not what is really needed. You can instead use your tax money to pay down other debt. This can help bring money back into your budget and increase your buying power.


3 Ways to use your tax refund if your goal is to own a home:


1. Use your tax refund to increase your credit score. 

Pay balances down on some credit cards to increase your credit score. You want to keep a little bit of revolving debt, so it’s best to keep your balance just under 10%.

Pro tip: If you have 3 different cards that are all maxed out or have high balances, it’s best to spread out the payments. So having all three cards at 50% is better than having one card at 10%. This can be hard to keep under control because sometimes you can have good intentions. But paying off debt has to be done strategically when you are looking to buy a home.


2. Use your tax refund to pay off high-interest payday loans.

You could be paying upwards of 60-70% on these loans, which means you are paying a lot for a little bit of money that you have been given access to. You want to go after these loans first if they are there, and this will free up money to be able to pay off other debt or put down on a mortgage.


3. Use the tax refund to pay off collections.

This is where it can get tricky, so it’s important to have a strategy in place! Sometimes, you don’t want to jump on an older collection. It looks better on the front end to pay off credit from the earliest to the oldest.


Coming in for an initial consult with us is important! When you come in for a consult, we are able to look at your specific situation and put a strategy in place that is best for YOU. We said that we love problem-solving, so we offer in-house credit repair services.

Start your journey home today! Schedule your free consultation with us below.

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Rent to Own is for Furniture

Bridge to Own® | 0 comments | by newman

The world is full of rent to owns and lease options. For people who can’t get a mortgage, these appear to be a way to move beyond renting and own a home. The problem is the traditional rent to own works better for buying furniture than buying houses.

The Problem with Traditional Rent to Own Programs

At New Again Houses®, we hear rent to own horror stories weekly.

“The landlord kicked me out after 5 years and sold the house.”

“The seller took my payments and didn’t make his. The house was foreclosed on.”

“The house is in such bad condition, no bank will give me a mortgage.”

“I’m at the end of my contract and I still can’t qualify for a mortgage.”

Many of these rent to owns are done with individual landlords who have little accountability when things go wrong. They aren’t members of the Better Business Bureau and don’t even have a Facebook page. If you put your money toward buying a house, you need to be sure the seller is legitimate, committed to selling the house, and you have a path that leads to a 30 year fixed rate mortgage.

It’s not enough to sign a rent to own contract. Eventually, you’ll need to qualify for a mortgage and that doesn’t just happen magically with time. You’ll need help with credit issues and the $29.99/month credit repair plans can cause more problems than they solve. Self-employed or commission based? That’s tricky and you’ll need help getting your finances in line with mortgage regulations. Then, there’s the house. Old windows with peeling paint? That could be a deal killer for an FHA loan. No heat pump? Old roof that’s survived a few hail storms? Knob and tube electrical wiring? The lenders and appraisers will go running in the other direction.

Our Bridge to Own® Program Solution

At New Again Houses®, we’ve developed the Bridge to Own® program to solve the problems keeping you from owning one of our remodeled homes. We won’t let you move in until we’ve done the following:

  • We look at your finances to ensure you can qualify with a licensed mortgage company or bank.
  • A credit expert develops a detailed plan to get your credit to the required score.
  • A licensed mortgage broker reviews the file to make sure we haven’t missed anything.
  • We invest in the house remodel so it will pass any lender’s inspection and be a good investment.
  • We talk through the contracts so you fully understand your responsibility in the process.

The Bridge to Own® program is not seller financing and it’s not your traditional rent to own. It’s a short term bridge that enables you to get a 30 year low fixed rate mortgage within six months. To get started, contact us today to see how our unique program can help you buy a home.

Bridge to Own®

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