Nolo's Essential Guide to Buying Your First Home Read Online Free
Author: Ilona Bray, Alayna Schroeder, Marcia Stewart
Tags: Business & Economics, Law, Real Estate, House buying, Property
the creativity and self-expression possible with home projects.
No More Mr. Roper: Say Goodbye to Renting
Expressing your personality isn’t the only advantage to leaving rental living behind. Say goodbye to things like waiting around for things to get fixed, wondering whether the landlord will raise your rent or kick you out anytime soon, and being surprised by landlords who stop by at their own convenience.
Even reasonable landlords who make prompt and thorough repairs and never raise the rent can pull surprises or sell the property. Owning your own house reduces the stress and uncertainty of renting. You’re in charge of when you move on, who comes in the front door and when, and what gets done to the place. While that means you’ve got some extra responsibilities, you’ve definitely got some extra security and benefits, too.
The Future’s So … Expensive!
If you pay $1,000 in monthly rent now, approximately how much will you be paying in 40 years, assuming average inflation (4% per year) and no rent control?
a. $2,500 b. $3,400 c. $4,800 d. None of the above, because I’ll own a home.
Answer: c or d.
Make monthly payments to myself, not the landlord. At age 25, Talia had only toyed with the idea of buying a house—she’d thought that, despite her full-time job, it was financially impossible. But then her landlord raised the rent. Talia says, “I looked into loan options—and to my surprise, I qualified. Within two months, I bought a converted first-floor apartment with a little patio, in a safe neighborhood. I love not having to share a washer and dryer with other people anymore. But even better is the feeling of independence of having my own place: Because I’m building equity, I like to think I’m making those mortgage checks to myself—and they’re not that much higher than my rent checks were, plus I can claim some significant tax deductions.”
You Can Do It … If You Want To
Are you still on the fence about homebuying? Some people just don’t feel ready to take the plunge. Below are a list of common “I can’t do it because . . . ” excuses. Don’t get us wrong: Not every excuse is a bad excuse. You just need to know whether yours are based on solid facts rather than plain old fear.
“But … I Like Renting”
Maybe you’re thinking, I really love my apartment or, I’m getting such a good deal . But even if your current rent seems cheap, cheap is never as good as free. Yes, we’re aware that buying a house isn’t free. But at some point, you won’t be paying a mortgage anymore. That will never be true if you rent.
CHECK IT OUT
Run your own numbers. These calculators compare the costs of renting and buying:
• www.myfico.com (click “More Credit Calculators,” then “Am I better off renting?”)
• www.nolo.com/calculators (click “Should I rent or buy?”)
• www.ginniemae.gov (under “Homeownership,” click “Buy vs. Rent Calculator”). While you’ll need to guess how much you’ll spend on a home to use these calculators, the result will at least give you a rough comparison. Revisit the calculators after you’ve looked at Chapters 3 and 6 (covering the financial details of buying a house).
All that being said, renting might be best in the following situations:
• You plan on moving from the area within the next few years. Buying is a long-term strategy, with some significant up-front costs. Plus, it’s easier to move out of a rental than a home you own—selling is almost as complicated as buying.
• You need flexibility. Buying is best for people whose lives are fairly stable. If your first priority is being able to quit your job any time a friend proposes a round-the-world sailing trip, maybe homeownership will feel more like a trap than a positive step. (Then again, we’ve met travelers who’ve sublet their house and supported their travels with the rent payments!)
• You expect your income to decrease
No More Mr. Roper: Say Goodbye to Renting
Expressing your personality isn’t the only advantage to leaving rental living behind. Say goodbye to things like waiting around for things to get fixed, wondering whether the landlord will raise your rent or kick you out anytime soon, and being surprised by landlords who stop by at their own convenience.
Even reasonable landlords who make prompt and thorough repairs and never raise the rent can pull surprises or sell the property. Owning your own house reduces the stress and uncertainty of renting. You’re in charge of when you move on, who comes in the front door and when, and what gets done to the place. While that means you’ve got some extra responsibilities, you’ve definitely got some extra security and benefits, too.
The Future’s So … Expensive!
If you pay $1,000 in monthly rent now, approximately how much will you be paying in 40 years, assuming average inflation (4% per year) and no rent control?
a. $2,500 b. $3,400 c. $4,800 d. None of the above, because I’ll own a home.
Answer: c or d.
Make monthly payments to myself, not the landlord. At age 25, Talia had only toyed with the idea of buying a house—she’d thought that, despite her full-time job, it was financially impossible. But then her landlord raised the rent. Talia says, “I looked into loan options—and to my surprise, I qualified. Within two months, I bought a converted first-floor apartment with a little patio, in a safe neighborhood. I love not having to share a washer and dryer with other people anymore. But even better is the feeling of independence of having my own place: Because I’m building equity, I like to think I’m making those mortgage checks to myself—and they’re not that much higher than my rent checks were, plus I can claim some significant tax deductions.”
You Can Do It … If You Want To
Are you still on the fence about homebuying? Some people just don’t feel ready to take the plunge. Below are a list of common “I can’t do it because . . . ” excuses. Don’t get us wrong: Not every excuse is a bad excuse. You just need to know whether yours are based on solid facts rather than plain old fear.
“But … I Like Renting”
Maybe you’re thinking, I really love my apartment or, I’m getting such a good deal . But even if your current rent seems cheap, cheap is never as good as free. Yes, we’re aware that buying a house isn’t free. But at some point, you won’t be paying a mortgage anymore. That will never be true if you rent.
CHECK IT OUT
Run your own numbers. These calculators compare the costs of renting and buying:
• www.myfico.com (click “More Credit Calculators,” then “Am I better off renting?”)
• www.nolo.com/calculators (click “Should I rent or buy?”)
• www.ginniemae.gov (under “Homeownership,” click “Buy vs. Rent Calculator”). While you’ll need to guess how much you’ll spend on a home to use these calculators, the result will at least give you a rough comparison. Revisit the calculators after you’ve looked at Chapters 3 and 6 (covering the financial details of buying a house).
All that being said, renting might be best in the following situations:
• You plan on moving from the area within the next few years. Buying is a long-term strategy, with some significant up-front costs. Plus, it’s easier to move out of a rental than a home you own—selling is almost as complicated as buying.
• You need flexibility. Buying is best for people whose lives are fairly stable. If your first priority is being able to quit your job any time a friend proposes a round-the-world sailing trip, maybe homeownership will feel more like a trap than a positive step. (Then again, we’ve met travelers who’ve sublet their house and supported their travels with the rent payments!)
• You expect your income to decrease
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