So I did some research online about the “Pride & Advantages Of Homeownership”. Of course it was littered with articles & blog posts, mainly from realtors & mortgage brokers, talking about what a great thing owning a home was. Here’s one that I thought was right to the point I am trying to argue against. The original authors thoughts are italicized, with my arguments below and bold:
“Owning a home was once the greatest symbol of the American Dream. And although the American Dream has changed a bit over time, home ownership remains an important part of what it means to be a successful American. But more than just the pride that you can take in having achieved this dream, home ownership gives you a number of other benefits that can ease your daily life and help you prepare for your future. While there are obvious financial benefits to owning your own home (as opposed to renting), there are also other advantages.”
Here are some of the advantages of home ownership:
His Argument: Tax deductions. There are all sorts of tax deductions which are available to home owners that aren’t available for people who rent. This allows you to save money every single year that you’re a home owner. These deductions include mortgage interest and property tax deductions. There are also certain tax tricks in the future when you sell your home.
My Thoughts: Tax deductions are only worthwhile if you’re costs to own the home are equal to or less than renting after you factor in the deductions. Yes, you get a slight tax deduction. But if it costs you more money to get a loan with interest, pay the taxes, insurance, HOA fees, and maintenance, when you add it all up, a few thousand dollars in tax deductions is still a losing proposition. And that’s not even going into property depreciation! If you factor in what’s been 5%-20% property value decreases for the last 3 years or so, worse in some areas, and you have a recipe for losing a ton of money! To say you’re saving a few thousand in taxes while losing tens of thousand in equity, interest, insurance, property taxes, etc, is like making an argument for the exercise you’ll get by walking after your car has just been stolen… some things just aren’t worth the trouble.
The money that you spend on a home mortgage goes towards a home that can eventually be yours to sell, rent or will to your kids. The money that you spend on rent just disappears to your landlord’s bank account.
My Thoughts: The debt that you burden yourself and your family with by holding onto a home that is upside down by 20%-50% will never eventually be yours to sell or rent, but you can and will leave it to your kids. Is the pride of homeownership worth telling your kids that they can’t go to college because of mommy & daddy’s poor financial decisions?
The value of your home will almost undoubtedly increase. There area always ups and downs in the market, but home values across the nation have consistently risen. This means that you’ll be your home today and it will be worth more than you paid for it at some date in the future. And looked at from the other side, the home you’re renting will also be worth more, so your rent can go up in time.
My Thoughts: C’mon now! Really? The value of your home will almost undoubtedly increase? Don’t even get me started! This is exactly the attitude that caused the housing bubble & crash in the first place.
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