The House Is Right, Is the Neighborhood?

In today’s real estate market, location matters more than home amenities.

“Location, location, location” is one of the most popular refrains in real estate. According to the New York Times, it dates back to 1926 and still holds true today. It’s important for homebuyers to consider the importance of the where when choosing their dream home just as much as the which.

Here’s why it matters so much, and what to look for when buying a home.

Why Location Is Key

Being close to your children’s school, within walking distance of local businesses, and in a safe neighborhood are big factors when choosing where to live. It’s also important from a monetary standpoint.

“Too often I hear people talking about making decisions based on the home itself, instead of the location, and that is a mistake,” says Ryan Fitzgerald of Raleigh Realty. A house can always be changed, he says. It can be upgraded or even replaced. But location cannot.

“Housing supply in great locations is limited to the number of homes in that location. Location creates desirability, desirability creates demand, and demand raises real estate prices,” he says.

Real estate agents usually advise clients to buy the worst house on the best block over the best house on the worst block, according to Fox Business. While this might seem counterintuitive if you’re looking for somewhere nice to live right now, it makes sense in the long run. You could have a brand-new house, but if it’s in a dangerous area, or far away from any services, it will be harder to sell, and possibly less enjoyable for you to live in. On the other hand, you could buy a home that needs work in a nice neighborhood. While you fix it up, you can enjoy all the amenities that your area has to offer — and if you decide to sell down the road, the home may be worth much more than you paid.

How to Choose a Location

While personal preference definitely plays a role — maybe you’ve always wanted to live on a farm rather than in a city, for example — there are some standard factors that play into how your home’s location can add value to your property.

Take some time to evaluate what you want in a neighborhood. Schools, safety, commute time, city versus suburbs, and local business and food options are good things to keep in mind.

Consider buying a home in a good school district, even if you don’t have children. If you think you may want to sell in the future, it’s a good thing to keep in mind, as it’s often a top priority for families. Commute time depends on your job and whether you’d like to be able to walk to work, prefer to live in a place with public transit, or need to be within easy access to a highway. Keep in mind, though, a home located just off a major highway may be noisy, so it’s important to consider your priorities.

A good real estate agent can help you find a home in a location that ticks all your boxes.

Up-and-Coming Neighborhoods

If you’re hoping to save money, you may consider moving to a neighborhood that is considered up-and-coming. These neighborhoods don’t have as many amenities as other areas, but because of a few successful shops and restaurants or an influx of young people, they can grow significantly in a short amount of time. When money starts flowing into these areas, public transportation and other services can improve, and more businesses will be enticed to move to the area. If you can be on the cusp of one of these trends, you can often buy cheaply and sell for a much higher price. Talk to your real estate agent about up-and-coming neighborhoods in your city and how they think those areas will grow in coming years.

When buying a home, especially if you’re hoping to sell it later and get the most out of your investment, it’s best to have an attorney on your side. Our real estate lawyers can help you navigate the buying process and find a home that’s the perfect location for your family and your future. Contact us today.


Real Estate Apps for Homebuyers

Homebuying is moving to mobile, but in some areas, apps can’t replace the expertise and human element of a licensed broker.

Buying a home? There’s an app for that, as real estate shopping is moving online. While homebuying apps can be great for sorting through amenities and location, there are certain skills only a licensed real estate attorney and broker can help with. Here, we’ll break down what’s useful about real estate apps, and what parts of the homebuying process can’t be replaced with technology.

How Apps Can Help

Much like real estate listing websites, apps can help you research the market, make lists of amenities you want in your dream home, and save the properties you love all in one place for future reference.

The Trulia Real Estate app, for example, helps you sort by location, number of bedrooms and bathrooms, square footage, lot size, open house times and home age. It also includes a mortgage calculator. Similarly, the Zillow app sorts by price, size, neighborhood features, school district and more. It also includes Zestimate®, the tools’ algorithm for finding a home’s value, as well as loan quotes and notifications when prices drop or homes are sold.

The following apps provide similar information, but they do things a little differently: Homesnap lets you take a photo of a house and instantly see information about it, including sales history and school district ratings. With Redfin, you can select a search area and see all available listings in that area, along with photos and more detailed information about each property. It’s popular Hot Homes feature shows you homes that have an 80 percent chance of accepting an offer within two weeks.

Why You Still Need a Broker

While these apps are great for an initial search to get an idea of neighborhood and price range, most of them eventually direct you to a licensed broker to walk you through the official process. Why? Because there are certain skills brokers have that an app cannot replace. Brokers can provide detailed information about the history of the home that you’re looking at — such as if there have been any busted pipes recently and when the roof was last replaced. They can also provide valuable insight about the neighborhood and what it feels like to live there — such how quiet it is, if past clients have enjoyed living there and more.

Brokers have more first-hand market data too, so they can give you advice on certain homes and areas that is more nuanced than statistics provided by an app. They are also experts at assessing the value of a property after a walk-through to know if you’re getting the best possible price. The app gives you a price, but you’ll never know if it’s fair. It’s very difficult to look at a home on an app and know whether or not there are hidden issues. A broker will help you ask the right questions and make that call.

Finally, a broker has the human element of connection. They know the best mortgage lenders, contractors and inspectors. They also know how to negotiate on your behalf, which can be reason enough to hire them. Those belonging to the National Association of Realtors are held to a code of ethics, so they’re generally trustworthy.

Buying a home is a huge investment. Brokers and real estate attorneys have the experience, and are there to help you at every step of your buying journey. Use an app to help you get an idea of what you’re looking for, pick a few favorite properties, and educate yourself on neighborhoods and home amenities, then reach out to a broker and an attorney to help with the actual homebuying process. Our real estate attorneys at Anselmo Lindberg & Associates are here to help. Contact us today.


Getting into Real Estate in Your 20s

What younger generations should consider before buying their first home

While millennials aren’t buying at the rate previous generations were at their age, they still contributed $514 billion to the housing market last year, and are the largest group of homebuyers in the United States, according to Zillow. While some young people aren’t buying homes because of affordability issues, others are looking at a home as an investment. If you’re in your 20s and hoping to buy a home, whether for investment reasons or otherwise, here are some things to keep in mind.

Preparing to Make the Investment

There are a few things all young people should think about before buying their first home. Start with a stable career in a location where you want to live, minimal debt, and prepared for the differences between renting versus owning, including being mentally prepared for the tough parts of owning a home, like mowing your own lawn and handling any needed repairs. Having a solid nest egg of savings is a step in the right direction. However, if you’re struggling to pay down debt, your financial efforts should go toward bringing debt down and your credit score up before thinking about a mortgage. One exception is student loan debt, which doesn’t typically count against you when buying a home.

Building Equity

The Washington Post reported that 85% of millennial buyers viewed their home purchase as a good financial investment. Millennial buyers are also looking into more affordable neighborhoods, which because of their investments could become expensive, more desirable neighborhoods in a few years. In the post-recession climate, many millennials are approaching real estate as a way to build wealth, without the risk.

Apply for a Loan

If you’re ready to buy in a certain area, get to know the market and figure out what you can afford. Start by getting prequalified for a mortgage so you have a realistic idea as to budget. This mortgage calculator from Bankrate can help you see what monthly payment you can realistically afford. Next, LendingTree can help you shop around for different lenders to see who has the best rates.

People in their 20s might want to consider an FHA loan, where they only have to put 3.5% of the purchase price down on a home. FHA loans are issued by lenders who are federally qualified, and they’re insured by the Federal Housing Administration. That insurance helps lenders offer a better deal, and enables those who can’t make large down payments to still be able to buy a home.

Buying a home is a big investment, but for those who feel settled and are financially prepared, it can make more sense than renting. If you think you’re ready to purchase a home in your 20s, the lawyers at Anselmo Lindberg & Associates can help walk you through the process.


How to Know if You’re Ready to Buy a Home

The four questions every potential homebuyer should ask before investing in residential real estate

Buying a house is no small feat: but for those ready to put down roots and make an investment in their future, it can be worth it. If you’re sick of renting and want a home of your own, it’s time to take a look at your financial situation and determine if you’re ready to take the next step. Your decision-making process will differ slightly if you’re considering a condo, a new home or a fixer-upper, but no matter what type of property you’re buying, there are some universal factors to consider before making the leap from rental to ownership. Potential homebuyers should ask themselves these four questions to determine if the timing is right to invest in a residential property.

1. How Is Your Overall Financial Health?

Buying a home is the biggest investment many people will make, so take an honest look at your financial situation to determine if you’re ready. First, think about the down payment, which is usually between 10-20% of the total home cost. If you don’t have at least 10% on hand for the down payment, take a step back and focus on increasing your savings. Ideally, you’ll have closer to 20% for a down payment saved.

Now consider all your debt, including credit card debt, auto loans, student loans, and any other personal debt. Some debt, like student loan debt, is acceptable when applying for a home loan, while other types of debt, namely credit card debt, will work against you. If you have a significant amount of debt, it’s probably because you don’t have enough money to pay it off. This is a red flag that you’re not ready to buy a house. When you’ve paid off all debt outside of loans for large purchases or investments (like student loans or an auto loan), you’ll be in a better position to apply for a home loan and make mortgage payments.

Finally, check your credit score. Get your score to 680 or higher before thinking about applying for a home loan. This might take some time; you may have to reallocate some of your down payment savings toward debt repayment. But these are necessary first steps. If your credit score is less than spectacular due of fraud, dispute the charges, and make sure everything is in order before applying for a loan.

2. How Long Do You Plan to Stay In One Location?

Buying a home is an expensive and time-consuming process, so most people want to make sure they’re going to stay in the home for a while once they move in. If you change locations often for work, renting might be an easier and cheaper option. If you know you’ll stay in one place for years, but you expect your family might grow soon (and potentially outgrow your current home), wait to buy until you know how much space you’ll need. Consider this calculation: Ann Reilley Gugle, a planner in Charlotte, N.C., says it takes at least five years to break even on a home. The upfront costs of buying a property may only level out if you plan to stay for the better part of a decade, or longer.

3. What Are the Patterns or Trends In Your Current Real Estate Market?

Look closely at long and short-term national trends, because recessions or economic growth can dramatically affect the cost-effectiveness of buying real estate. Even more important than national statistics are local trends: the real estate market can change dramatically from city to city and even neighborhood to neighborhood. Real estate value in cities like San Francisco and Seattle has been rapidly climbing in recent years, while home prices in cities in the Midwest have fallen or stayed the same. The rental market in your chosen city may also factor into your decision. In some cities, the rental market can be very expensive, making home ownership more affordable if you have sufficient savings. Combine national trends with trends in your chosen community to get a sense of how the market will determine your home price and value.

4. Do You Fully Understand the Cost of Home Ownership?

The cost of buying a home includes more than the down payment and mortgage. Add to that expenses like property taxes, insurance, HOA dues, repairs, utilities and more. Most online mortgage calculators take homeowners insurance and property taxes into account. Make sure you enter numbers specific to your market, since taxes and insurance rates can vary widely by city. Homeowner association fees cover things like amenities, and can come in handy if something goes wrong in your home. However, they can add up to hundreds of dollars per month, and for some families that might not be worth the cost. Take HOA fees, projected repair fees and regular maintenance costs into account when calculating how much a new home will cost per month. Brandon Turner of Money Under 30 warns against taking on a monthly payment that is more than 25% of your take-home pay. He says that often lenders will tempt buyers to stretch themselves thin, but in the long run it’s not a good idea.

If you’ve asked yourself these four questions and think you’re financially ready to invest in a home, check out our homeowner’s guide and other resources on this topic. Then, contact Anselmo Lindberg and Associates to speak with our experienced real estate attorneys and take the first steps on your way to home ownership.


2018 Real Estate Trends

From co-living to smaller homes, here’s what will drive the real estate market in 2018

As technology advances, the market shifts and new generations become home buyers, real estate behaviors change and evolve, too. A new year means new real estate trends to watch for, whether you’re buying or selling. The real estate market is always fluctuating, so these trends may be fleeting, or they could last all year. While these aren’t strict guidelines, keeping an eye out for 2018 trends will put you in a more informed position when entering the market, which is always a good thing.

Co-Living and Community-Driven Spaces

Co-living has a broad definition, but is essentially a housing model where people live together and create a community within one home. It’s like a group home, but nicer, and developers are getting involved by building spaces with luxury common room amenities, or by turning office spaces into housing. Millennials, who are marrying later, are drawn to the idea of “family dinners” and shared workspaces. Among younger generations there’s a desire for unique experiences, which co-living can provide, unlike traditional housing: so watch as community-driven residential spaces make their mark on the real estate industry this year.

Smart Home Automation

In 2017, devices like Amazon Echo and Google Home became popular, and in 2018 reliance on tech in the home is expected to increase. From lighting and automatic shades to more serious issues like security, automation is becoming more affordable for homeowners. In 2013 the global home automation and security market was worth $5.77 billion. That number is expected to rise to $12.8 billion by 2020. Get ready for automation to be an oft-cited plus if you’re buying. If you’re selling, consider whether it’s worth setting up to make your home stand out.

Generation Z’s Emergence

Generation Z, those born in 1995 and later, has officially entered the workforce. There are expected to be 2.56 billion Generation Z individuals around the world by 2020, which means they have lots of influence over industries. While millennials graduated during downtimes for the economy, Generation Z has fared better, meaning they’ll earn higher wages earlier in life. Meanwhile, millennials are also finally starting to see wages grow. As these groups enter their 20s and 30s, expect them to start buying homes.

Equalizing Supply & Demand

There’s been a shortage of homes for sale over the last few years, but according to the economics team at realtor.com, that will change in 2018, probably around fall. With more homes on the market, demand will catch up. Markets like Boston, Detroit, and Nashville will likely recover first, but more construction across the country will mean an increase overall.

Smaller Living

Where construction isn’t possible, like in dense or overpopulated areas, tiny homes will be all the rage. Nathaniel Kunes of AppFolio Inc. says this trend is expected to become the norm in big cities, and will have an impact over the next decade. Smaller living spaces are popular among minimalists and can be a good way to make income on existing apartments.

While trends change throughout the year, these five are likely to have staying power. Taking them into account as you enter the market will put you ahead, but your biggest advantage lies in having an experienced team by your side that will prioritize your interests and your needs. Contact Anselmo Lindberg and Associates today to learn how we put decades of real estate expertise to work for you.


Risks of Buying a Foreclosure

Roadblocks that can make buying a foreclosure a Money Pit

When a homeowner fails to pay their mortgage for an extended period of time, the home goes into foreclosure. This means the homeowner forfeits all rights to the home and it becomes the property of a bank or other lending institution. Once the homeowner has been evicted, the house is auctioned to the highest bidder.

Buying a foreclosure can be a great opportunity to get an affordable home, but it also carries risks. Buyers don’t always have the opportunity to inspect the property, and may find major issues with plumbing or electricity cost more to fix than the savings on purchase price.

Know the risks of buying a foreclosed home

While the low prices may be tempting, there are downsides to buying foreclosed homes. In the typical home-buying process, both sides can negotiate; but when buying a foreclosed home, the listed sale price is usually firm.

Expensive Repairs

Foreclosed homes are sold in exactly the condition you find them, and it’s the buyer’s responsibility to pay for repairs. In traditional home sales, repair costs present an opportunity for negotiation on price; often a home’s previous owners will pay for some repairs before selling, or reduce the purchase price to offset them. But a homeowner that couldn’t afford their mortgage likely couldn’t pay to maintain the home, either, increasing the risk that foreclosed homes will need costly repairs.

Additionally, the foreclosure process is long, so by the time the home hits the market, it’s likely been vacant for months without maintenance. Often, foreclosed homes have structural issues, including mold, broken pipes, animal or insect infestations, or other costly damage. Don’t take on a foreclosed home unless you’re confident in your abilities to rehabilitate it, and whenever possible, take the opportunity to inspect the home before buying.

Inheriting Debt

Unpaid debt is another downside to buying a foreclosed home. In some cases, the new buyer may be held responsible for unpaid taxes or construction loans. Make sure you understand exactly what you’re getting into before you buy. This is where an attorney who specializes in foreclosure law can help.

Difficulty Getting Loans

Lenders are not as eager to give out loans for foreclosed properties, and some lenders don’t offer mortgages at all for “distressed properties.” Most mortgages are determined based on the appraisal value of the home, so if the house is in bad shape and valued at a very low price, it could be hard to get a large enough loan to also cover repairs. Additionally, investors purchase foreclosed homes often, which creates competition for the average homebuyer who isn’t as experienced in the process, or who doesn’t have as much cash up front.

Buying a foreclosure can have big payoffs, but only if the circumstances are right to reduce your risk and maximize your opportunities for profit. Misjudging the value of a foreclosed home can turn an investment opportunity into a major financial setback. Working with an experienced real estate attorney familiar with foreclosures can help. Contact Anselmo Lindberg & Associates’ team of expert real estate attorneys and put them to work for you today.


Purchasing a Home to Rent or Flip

Everything you need to know about buying real estate for profit

Purchasing an investment property is a great way to generate additional income, but it isn’t as simple as hitting the real estate market in search of a great deal. There are substantial differences between purchasing a primary residence and taking on an investment property. From tax liability and insurance premiums, to what you should expect from a mortgage lender, below we have outlined the key differences between a primary residence and an investment property.

Primary Residences vs. Investment Properties

Primary Residences

A primary residence is the home you live in for the majority of the year. To be considered a primary residence, the property should be within a reasonable distance of your place of employment. If there is ever a question of where you reside for most of the year, you may be required to prove your residence with documentation, such as your voter registration or a tax return.

Primary Residence Benefits

One of the major differences between primary residences and investment properties are the guidelines pertaining to taxes and insurance premiums. Primary residence owners can take advantage of several tax write-offs to make their property taxes much more manageable. According to TurboTax, some of these deductions include mortgage interest, property taxes and the interest on your home equity loan. Primary residence owners are also entitled to $250,000 in profit before they’re forced to pay any taxes on the sale of their property.

Investment Properties

An investment property is as straightforward as it sounds – real estate that is purchased with the intention of earning a profit. Return on the investment can be earned through renting out the property, or by “flipping” or renovating the property with the intention of selling it.

Investment Property Benefits

While it’s easy to benefit from the several deductions associated with primary residences, those with an investment property will not have access to the same advantages. Investment property owners are entitled to some deductions, but they come with a stipulation – the owner must rent out the property.

For the most part, homeowners insurance and rental property insurance are very similar. Just like the tax benefits of a primary residence compared to an investment property, insurance premiums for primary residences are generally much cheaper. The reason for this is because insurance companies assume that renters will leave their units in much worse condition than a home you own. The two major disparities between these types of insurance are loss of rental income, which is designed to protect landlords, and the items protected in covered losses. According to The Nest, you should expect to pay 15-20 percent more for landlord insurance, despite not receiving coverage on several types of damages that are covered under homeowners insurance.

Investment Properties and Mortgage Loans

Working with mortgage lenders to purchase an investment property is a complicated endeavor that can backfire at any moment if you’re not prepared. According to Investopedia, lenders will generally require investors to put a down payment near 30 percent of the final purchase price for investment properties, rather than the typical expectation of 10-20 percent for your primary residence. If you’re unwilling to pay these steep prices on a down payment, you may be interested in a Fix-and-Flip loan. Fix-and-Flip loans are much more affordable up front, but generally have rather high interest rates.

It can be tempting to enter the real estate market before having an understanding of how investment properties work. However, educating yourself on the intricacies of these deals will play a major role in your level of success as a real estate investor. To learn more about becoming a player in the real estate market, contact Anselmo Lindberg & Associates today.


Understanding the Three Most Common Property Liens

Property liens can come from multiple sources and bring a pending sale to an abrupt halt

No matter how close a sale is to closed, the discovery of an outstanding lien will bring the sale to a grinding halt. While most properties are unencumbered, liens can come from multiple sources, the three most common being the federal government, the courts system or disgruntled technician. Whatever the reason for the lien, ownership cannot be transferred from one party to another until a lien on the home or land has been resolved. To prevent such a burden from taking place, it’s important to understand what a lien is, the different types of common liens, and what you can do to navigate through the lien settlement process.

What is a lien?

A lien is a notice attached to your property stating that another creditor has a claim over your land or home because of an outstanding debt. It’s a public record filed with the county or state—depending on the type of property you own. While there are a number of different types of liens creditors can put in place, the most prominent include tax liens, mechanics’ liens, and judgement liens.

3 Common Property Liens

Judgment Lien.

Loss of a court case with a judgement against you can result in a judgement lien. This may include child support, alimony, or other judgement-related lawsuits. The lien will be held against your property until the payment is fulfilled. This lien can also be inflicted by an attorney if legal services go unpaid.

Tax Lien.

The federal government will place a tax lien on a taxpayer’s property when the taxpayer fails to pay, and shows signs of being incapable of paying, the IRS. This type of lien takes precedence above all other creditor liens. Once a tax lien is in place, it can prevent them from receiving credit in the future and make it nearly impossible to sell their home. If the taxpayer fails to pay the full amount owed or reach a settlement with the IRS, the government can seize any assets owned by the taxpayer.

Mechanics’ Lien.

A mechanics’ lien is filed by a general contractor, plumber, worker, or other repair man when they work on a home. The lien held against the property will enact when the customer and property owner fails to pay for services provided. A mechanics’ lien secures the debt owed to the service provider and will help ensure they will be paid for their services. More on mechanics’ liens here.

How a lien can impact a real estate closing

When looking to sell or refinance your home, it must be proven that your home has a clear title. Having a lien on your home makes your title unclear, and thus, impossible to close on a sale. In order to clear the title, creditors must be paid the amount of debt attached to the property or have the debt settled in the court of law.

What to do if there’s a lien on your property

In the event that a lien is placed on a home you own or are trying to purchase, our real estate attorneys can help you find out details on any liens held against your owned or perspective future property, and take the steps to remove those encumbrances. Whether you’re a buyer or a seller, understanding liens, their implications, and how to navigate them is essential to your future real estate transaction. Call Anselmo Lindberg & Associates to have one of our real estate attorneys assist you in your next purchase or sale of property.


Everything You Need To Know About Home Inspections

Home Inspections Protect Buyers and Sellers from Costly Surprises

Whether you’re buying your first home or your fifth, a thorough home inspection is essential every time. Before closing on a house, every buyer should arrange their own thorough home inspection, even if the home is new or has no visible flaws.

“No home is perfect, not even new construction,” Brenda Avilla-Kintz, a Realtor with Legacy Real Estate & Associates told US News & World Report. Problems may often be hidden in the attic or walls of even the most perfect-looking house. A home inspection will not only help uncover to this issues, it also gives buyers leverage in negotiating a final price. Without an inspection, these problems will surface later, leaving the new owners stuck paying for repairs on top of their home-buying costs. Home inspections can help protect sellers, too, from being blindsided by unexpected expenses that could threaten the closing of a sale.

Here’s what you need to know about arranging an inspection of a home before you buy.

Commonly-Asked Questions About Home Inspections

What do home inspections cost?

Inspections range between $300 to $800, according to HGTV, and typically take two to four hours. Those few hundred dollars could save you thousands in repair costs.

How do I find a home inspector?

Use an inspector who is regulated by the state, or has an equivalent certification. The American Society of Home Inspectors allows you to search for certified inspectors by state. Cross-reference that list with reviews like you would any other service job, or ask your broker for recommendations.

What will home inspectors look for?

A home inspector will take a thorough look at the entire home from top to bottom. They’ll go up on the roof, into the attic, check outlets, light switches, faucets, appliances, vents, doors, garage doors, windows, plumbing, the carpet—everything. A good home inspector will take photos and let you join the inspection if you wish, so you can ask questions. At the end, they’ll give you a detailed report of any issues they found.

What do you do after the inspection?

Once the inspection is complete, your next steps depend on the inspector’s findings. Ideally, the home is in great shape and you can continue with your contract. If there were minor issues uncovered, you can negotiate with the seller to either make the repairs before the sale, or to close at a lower price to accommodate them. If there are major issues with the roofing, foundation or toxins, you might want to reconsider the purchase. Remember that a ‘fixer-upper’ may sound fun, but only if you’re truly prepared for the repair costs.

Whatever you decide after the inspection, getting it done in the first place is a vital part of the real estate contract process. An experienced attorney can help you review the initial contract and negotiate after the inspection. The attorneys at Anselmo, Lindberg and Associates are experts when it comes to real estate law and will be there with you every step of the way to make sure your inspection process runs smoothly.


The Pros and Cons of Renting vs. Buying

How to Decide Whether Renting or Buying Is Right for You

You’ve been renting for years and saving up your money, and now you’re ready to think about buying a home. But is buying really better than renting? It depends. If you’re planning to settle for several years, buying could be worth it. If there’s a chance you’ll find a new job in another state, if you’re not sure owning a home is your best investment, if you’d rather outsource your home maintenance or if you live in a costly area, renting might still be the best option.

Don’t Make the Move Just Because You’ve Banked a Down Payment

The New York Times has an excellent calculator that’s a good starting point as you analyze your situation and compare the costs of renting and buying. It includes hidden costs like insurance, appraisal fees, taxes, opportunity costs, and more. As the calculator illustrates, home price and mortgage vs. rent payments are aren’t the only financial factors you need to consider.

Here are a few more pros and cons to consider as you evaluate whether renting or buying is right for you:

Pros of Renting

  • When something is broken, you don’t have to fix it. In an apartment, the building management handles repairs and remodeling. From leaky faucets to replastering walls, all you have to do is call your landlord. Not handling your own repairs saves you both time and money.
  • Renting gives you more freedom. Say you get a fabulous job offer in another state and you want to move, but you can’t sell your house. Renters don’t have that problem. Maybe you want to downsize so you can take a lower-paying dream job, or you want to live in a more urban area. Selling your home can be a long, stressful process—but if you’re renting, all you have to do is sign a new lease.
  • The real estate market doesn’t affect you. Renters aren’t hurt by short-term dips in the real estate market, and they don’t have to worry about whether their home is a good investment when deciding where to live.
  • Renters are mortgage-free. Yes, mortgages build equity over time, but they don’t necessarily bring you financial gains. If the real estate market tanks, or home values in your area go down, you could be at a financial loss if you decide to sell. Renters don’t risk having their largest asset depreciate.
  • Renters have more freedom to invest. Because renters aren’t sinking most of their money into a home, they can use that extra cash to invest in the stock market, their education, starting a business or anything else, which can sometimes have much bigger payoffs.

Cons of Renting

  • It’s never really yours. You could live in the same apartment for years and grow to love it like your own home, but unless you own it, you don’t have that security. You may have restrictions on painting and decorating, the inability to plant a garden or have guests stay long-term, and there’s always a chance your landlord could change or sell the property and you would have to move.
  • You miss out on federal tax benefits. Renters don’t get to deduct their mortgage or property taxes, and they don’t get to take advantage of federal tax credits.
  • Renters don’t build equity. Rent payments go to a landlord, who owns the building. Renters aren’t putting their money anywhere that it could grow. For homeowners, each mortgage payment is an investment in owning a piece of real estate.
  • There are daily annoyances and some hidden costs. Coin-operated laundry can add up, and having to run small changes past your landlord can be frustrating. A nonresponsive or uncommunicative landlord can delay the repair of small problems for longer than you’d like.
  • Price hikes happen. Renters don’t have stability when it comes to rent prices. Homeowners know their mortgage payment will stay the same no matter what happens in the housing market, while renters know that landlords could hike the prices each year, at any time, for any reason.

Pros of Buying

  • Paying a mortgage builds equity. Buying a home can be costly, but every dollar is an investment in something you will eventually own. Any home improvements you make can further increase your home’s value, helping to bring your net worth even higher.
  • Ownership has tax benefits. Homeowners are eligible for federal tax credits and can also deduct property taxes when filing federal income taxes.
  • Homeowners are free to personalize. If you own a home, it’s yours to do with as you please, whether that means painting, knocking down walls or changing your landscape. Through decorating and remodeling, you can create your perfect dream home, without having to win over a landlord or make compromises.
  • Pets aren’t a problem. Many apartments don’t allow pets, and even if they do, they’re often not the most friendly spaces for dogs or other animals. If you own your home, you can provide a comfortable environment for whatever type of furry (or scaly, or water-dwelling) friend you like.
  • There’s potential for rental income. Homeowners can rent out rooms or their entire home through services Airbnb, HomeAway, VRBO or via word of mouth. Short and long-term rentals are great ways to make some extra money and help pay off a mortgage, especially if you travel often.

Cons of Buying

  • You own it. Yes, the hallmark of owning a home could also be its biggest con. Once you own it, you’re stuck with it, at least until you can sell. If you need to switch locations for work, if you lose your job, if you need more space for a growing family or if there are massive repairs needed, you’re stuck with the house. Depending on the situation, ownership can become a financial burden.
  • Maintenance and repairs are your problem. No more calling your landlord when something doesn’t work: now it’s up to you to either DIY fix it or call the plumber, electrician or other specialist. Repairs take time and often carry a big price tag.
  • You’re on the hook for any hidden costs. Buying a home isn’t just about a monthly mortgage payment. There are also appraisal fees, broker fees, insurance, inspections, a down payment and more. This post from Money Crashers breaks down the upfront, recurring and special costs of buying a home. All of these costs may be worth it if you love your home and plan to stay in it for years. But if you expect to buy and sell again soon, these extra costs will add up fast. Factor them into your monthly costs and how much your home will appreciate in the years until you plan to move.
  • Don’t forget property taxes. According to Bankrate, first-time home buyers are often shocked at how high their property taxes are. Make sure to research tax rates in the area before buying, and remember that renters don’t pay these fees. If the neighborhood you love has a high property tax rate, renting might be a better deal.
  • Buying is more expensive upfront. Renters pay little to nothing upfront, while most homeowners pay 5.5% of the home’s value or more before they even move in.


If after you’ve weighed the pros and cons and decided that buying is the right choice for you, we can help. Contact Anselmo, Lindberg and Associates’ practiced real estate attorneys to start the process right.


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