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Take the Emotion out of Buying a Home - Reloaded Thumbnail

Take the Emotion out of Buying a Home - Reloaded


Hello Hello!! So been bored in the house in the house bored.. clicking a lot…Food Channel…fake sports, etc…came across one of my favorite shows on the aforementioned Food Network, "Good Eats"…starring Alton Brown…(I do come from a long line of chefs and restaurateurs…who are struggling …so go get something from your favorite local spot!! They need the business!) except this time it's titled Good Eats: Reloaded…Alton Brown goes back into time and updates his most popular shows…so in an homage to all my foodie peeps..I am reloading my most popular "Don't Know Don't Care" blog from my days blogging for NerdWallet.. May 18th, 2016, "Take the Emotions out of Buying a Home." Here is the link: https://www.nerdwallet.com/blog/finance/take-emotion-buying-home/

 Take the Emotion out of Buying a Home-reloaded

             Buying a home, raising a family, and retiring early; goals that we all wish to achieve, but for some of us, we are not quite sure how we can afford it all. With U.S home prices rising four percent from last year, now more than ever, people are trying to figure out whether renting or buying is the safe choice for them. In a recent Fortune article, author Rey Mashayekhi notes that not only is a home the largest purchase that Americans will ever make, it is also likely that it will become their best chance to create long term sustainable wealth throughout the entirety of their careers (Mashayekhi, 2020). However, due to the substantial amount of new homeowners looking for their first house, many current owners fear putting their place on the market out of fear that they will not have one to buy following the sale of their own. This raises the current question that many Americans are facing; rent or buy, and why?

             Alongside "surging home prices, low inventory, and high transaction costs, more people are questioning the validity of purchasing a home altogether" (Richardson, 2020). Three main points are necessary to think about as to why renting might very well be the safer bet for you. Flexibility, rising debt, and the redefinition of financial success in 2020 must be taken into consideration. It appears the trend with today's millennial generation is the lack of loyalty they provide to a given company. Every three to four years, they are interviewing elsewhere as they look to climb their way up the ranks through bouncing around, as opposed to sticking with one company. Americans are averaging twelve job changes throughout their lifetimes, making short leases/rentals the preferred option. Per Fox Business journalist Conor Richardson, American workers have welcomed the idea that changing jobs can improve long-term career earnings and potential development rather than hanging onto one company (Richardson, 2020). If this trend seems to continue and sporadic job changing is the preferred option for an individual, the benefits of renting short term is the most logical way of keeping a roof over your head. Accompanied by the trend of job-hopping, debt in the United States simply continues to rise. The average adult in the United States of America has an average of thirty thousand dollars in debt! The majority of that comes from credit card loans and student debt that can make the home-owning experience miserable and create long term panic. With "revolving debt payments, Americans are forced to make large monthly payments to alleviate their debt load, leaving little room for saving, building up an emergency fund or investing" (Richardson, 2020). This swings the favor to the side of renting monthly until the debt has vanished and that burden is lifted. Finally, the terms of financial success are seemingly being redefined. Richardson agrees that the prior picture of a suburban house with the white picket fence in front, which was once used as the poster for economic success, simply does not resonate in today's economy (Richardson, 2020). People simply do not view owning a home as a sign of financial success, "instead, they place a greater emphasis on lifestyle design, taking mini-retirements, and focusing on achieving an earlier retirement" (Richardson, 2020).

             When buying a home, you must be confident that you can afford a mortgage, or the bank will be receiving a gift that you worked tirelessly to attain. If affording a mortgage is looming over your head, you can take a fixed-rate mortgage so that the fear of monthly payment increases is eliminated. This can ease everyday stress that does not need to be added onto everything else, driving you crazy in your life. With many people bouncing from job to job, major cities are beginning to become overcrowded, making places to find rent hard to come by and heavily overpriced because of the increasing demand. This is leading people who work in large cities looking to start a family to set their sights on the suburbs outside of the city and purchase a home that their family will be able to grow in. Raising a family in a city such as Boston or New York City can be tough with transportation and overpopulation, which makes looking for a place away from all the commotion the preferred destination of many. "Over the long term, buying easily wins if the buyer is solidly employed, withstands recessions, and rents out a portion of their home to create revenue while enjoying further tax breaks. Buying to rent is a clear winner" (Collins, 2020). Real estate has been deemed the key to financial freedom for most of the millionaires in this country and across the world. If done right, the return on investment accompanied with buying a property, fixing it up, and either flipping or holding with the intention to rent will lead to long term financial success and overall increased wealth for years to come. 

           When all is said and done, where you decide to live should be one hundred percent individualized to you, and what your financial background looks like. Comparing your success to your peers can be a dangerous road to take when deciding what to do with the biggest investment of a person's life. Will you be marrying and raising a family? How much of a house can you afford? How high will mortgage rates climb? Is it the right time to buy? All of these should be prioritized based on you and your goals. Stuck and looking for guidance? We would love to help and give you our thoughts, or at least be a sounding board on what to do and how to get there! Reach out or introduce someone who is stuck and looking for guidance. As always, your concerns are our concerns. 

Keep the faith! Talk soon—

Daniel J. Friedman