The Either/Or Of Money: Rent Vs Buy, The Other Costs Of The Keys

When it comes to money, things can be interesting. It seems like the talk about the infamous “Rent Vs Buy” can go either way as the vibe goes when it comes to the value of making your decision. Most people focus on the wealth potential of owning a home, but the other side of the coin that comes with it—yes, getting your down payment and approval of a mortgage (which I’ve been seeing interesting things around lately). The thing that has been interesting to watch lately is that you’re seeing more people give the real to their real estate journey. Yes, they held the sign that they brought home, but the “house poor” that some owners are experiencing is sad.?

Everyone doesn’t want to own a home. Everyone doesn’t want to rent. Allow people to find their path when it comes to where they lay their heads and make their bread (money). The formula when it comes to making, keeping, saving, investing, and growing your money is legit personal. From algorithms to articles, the tug of war when it comes to whether one should rent or buy is becoming a broken record during an economy that is even more shaky. Everything isn’t for everyone!?

Let’s get into some things to consider when buying a home or not buying a home.?

$18,000.?

American homeowners are now paying an average of $18,118 a year on property taxes, homeowners’ insurance (homeowner insurance has gone up some 11,3% in other states by 21.8%), maintenance, energy, and various other expenses linked to owning a home. There are hidden costs that can come with homeownership. This figure might look different per the market that your home is in, but the countless tweets, posts, and think pieces that I’ve seen around people getting approved for a home or let alone determining if their warranty would cover a random leak/foundation structure.?

Some? Other Hidden Costs Of Homeownership:

• Taxes, Taxes, Taxes: Property taxes vary by location, but they can add a significant chunk of change to your monthly expenses. Factor this in when considering affordability. This has been driving folks into confusion due to the costs going up without notice.?
• Insurance Safety Net: Homeowner's insurance protects your investment, but it's an ongoing cost. Just like other insurance going up, folks in California and Florida are seeing it the worst.?
• HOA Fees (Optional, But Can Be Pricey): Homeowner association fees can add a layer of cost, depending on your community. Alone the rules can rule your home-owning experience. Some can have benefits, some can be a burden.?
• Maintenance Can Be A Menace: Some folks are finding their warranty not covering the value of what they paid on it let alone the process has become a pain.?

Yes, the value of the home can go up - but it's going to take some time to get there. And the American Dream is no longer to have a picket fence - but to have financial freedom. There are other ways that Americans are finding that freedom. The desire for a homeowner can come as a 12-course meal for your budget.?

Taking Control: Estimating Your Ongoing Costs

1. Research is Key: Investigate average property tax rates in your desired area. Talk to real estate agents, local homeowners, and even vendors (like electricians, plumbers, insurance agents, etc). to get a sense of typical maintenance costs.
2. Factor in Insurance: Get quotes from different insurance companies for homeowner's coverage. Get an understanding of what costs could be in case of catastrophic events or the ebbs/flow of historical costs for insurance.?
3. HOA or No HOA?: If considering a community with an HOA, factor in the monthly fees. Also, what rules come with it? Scary and annoying as heck.??
4. Utilities: Be Conservative: Research average utility costs for similar homes in your area. The budget is a bit higher to account for potential fluctuations.

Home Budgeting For Success:

1. The Power Your Spreadsheet/Budgeting App: Create a budget that includes your mortgage payment, estimated property taxes, homeowner's insurance, potential HOA fees, and a line item for maintenance. I would even go as far as determining an average of costs.?
2. Sinking Funds: Your Secret Weapon: Set up a sinking fund, a dedicated savings account, to accumulate money for expected (and unexpected) homeownership expenses. I recommend an HYSA within Ally that you can designate towards home buying/home-keeping costs. They even had a great article about the cost of buying.?

If Renting Still Works:

IF you determine that the potential ROI doesn’t match your financial goals, then start to make a plan or roadmap for other ways to achieve the financial freedom that you would like to experience. Maybe it’s to pay off your credit card debt, or dreadful student loans, increase your retirement fund, or be able to travel more. While all of those things you could/can do with owning a home, it’s up to you to prioritize how money looks for you. I would still tell you to negotiate your rent to fit your budget or to help boost your savings/debt payoff. While you’re renting you get a realistic view of what your financial life looks like.?

My Homeownership Journey:

With my platform, I want to start looking at the Either/Or when it comes to money - having a realistic scan of common talks when it comes to finding your balance financially. Also, giving you a peep into my wallet at the same time. Years ago, I found myself pondering buying a home. I was making right at 6 figures and started the process only to get the real deal from my potential mortgage lender who advised that I take some time to “live” and then look into buying a home. She also gave me some insight into the costs of buying a home vs keeping it. Do I want a home, yes. Do I want the home to run my budget, nope. At least not yet. I talked about the rental sinking fund that I’m going to convert over to when I buy and then when it comes to keeping my home up. My sinking fund is growing with me. Funny how I’m talking about that now while renting a townhouse, yet just paid off my car. Determining what wealth looks like for you will give you the work (roadmap) to get there. To be focused on your goal, but flexible in your actions creates alignment. Recently I just developed a roadmap for a couple of clients who were preparing to buy a home, and some of my advice is within this newsletter.?

Planning Is Key:

Owning a home offers advantages, but it's a financial commitment. By understanding the ongoing costs and planning your budget accordingly, you can make an informed decision about rent vs. buy, and ensure homeownership becomes a path to financial security rather than a burden. By anticipating these potential costs and factoring them into your budget, you can [try to] avoid financial surprises. Consider a sinking fund specifically for homeownership expenses, so you have a safety net for unexpected repairs or upgrades. Owning a home can be a fantastic experience, but go into it with your eyes wide open. Understanding the ongoing costs will empower you to make informed decisions, budget/save, and create a secure financial future. If it’s not for you, find what is. Don’t let the algorithm or articles bully you into buying something you aren’t mentally or monetary ready for. Do things at your own pace and race.?

Call to Action:

Still unsure if buying is right for you? Contact me to discuss your financial goals and create a roadmap for success!