Tran Harry – The Economy Needs A Fix

Owning a home has its advantages and homeownership definitely has its disadvantages as well.

Buying a home can be a very satisfying adventure, it can cause a sense of pride through ownership. It can also be a means to stability, not needing to move at the whim of a landlord’s discretion. But I believe being a homeowner requires responsible insight into the requirements needed of becoming a homeowner. Being a homeowner many buyers need to examine and make need-based decisions while clearing their mind of many commonly established myths for owning a home. Much of the ideals that people hold regarding homeownership come from decades of harden marketing propagandas from those who gain the most from selling homes, such as real estate companies, agents, and homebuilders.

I’m here to try and debunk some of the commonly accepted myths of what homeowners believes to be true, or simply wishes were true.

You don’t own the home until you pay the bank off. The home that you thought you bought isn’t yours until you are done paying off that mortgage, and not a day sooner than the moment you issue your last check to your lender and your mortgage balance reaches zero. Until than all the renovations, improvements, additions, or alterations are done to a home that was lent to you by the bank. Which is why a mortgage is called a loan, you’re borrowing money from a bank at a price in order to stay in that home. Tell a bank that the home is yours before you pay off the loan, and see the reaction on their faces.

What homes aren’t.

A home is not a ATM, it isn’t an infinite piggy bank, nor is it much of an investment vehicle which will fuel your ability to retire young and travel the world while being able to cash in on the growing equity that is piled on by your homes rising value. Home Equity Line of Credit (HELOC) should be looked at with the same careful scrutinizing lens as you would credit cards. They are additional debt instruments that are offered and they do need to be repaid, whether or not your home value sustains its value.

Myth: Home values are immune to economical cycles.

The economy moves in peaks and valleys, eras of expansion and contraction, prosperity and recessions. Homes are not immune to these cycles. Home sales are largely tied to consumer confidence and household incomes. If buyers are worried about unemployment, layoffs, and reduced gains in their investments they may decide to hold back on buying another liability vehicle.

Contrary to popular belief Real Estate Agents are not your friend.

Due to heavy use of propaganda and marketing material, we have been accustomed to believe that real estate agents are there to help us and service us with our needs. Yet in the industry they do nothing but serve as gate keepers to information, they know where the best listings are and hold that information against you. They pass off lemons as diamonds and use their status and “expertise” as the expert to lead you towards what will be the best for their pockets. In an industry where they get paid by commission they are essentially driven to the largest payout which conversely as a buyer you want the smallest payout.

Renters are not 2nd class citizens with miserable lives.

Many renters are not forced to be renters yet are actually self voluntary renters. Having a landlord is often depicted as a bad thing, but being a renter has its perks as well, aside from not being able to paint your walls a desired color or changing your own carpet, when necessary repairs come in it is often done at the expense of a landlord not a renter. Many renters are actually able to afford to rent a lifestyle which is higher than what they would be able to live had they bought the lifestyle. And no they’re not borrowing a lifestyle they cannot afford because buyers are borrowing too.

Add-ons, customizations, expansions don’t guarantee higher returns.

Many television shows came out instructing viewers the quickest way to gain value and market your home is to renovate. Often times a renovation is unnecessary. Any desired renovation must be weighed off with someone willing to pay a premium for the renovation. Would your prospective buyer really care to pay a 5% premium on your 3 bedroom single family home because it has granite counter tops now? Or would they have been happier without and paying the cheaper price. When thinking of renovations keep in mind the demand from buyers as well as whether or not this is what will ultimately please you if you were to have to live here because no buyer can be found.

There are many other myths that I will get to at later times about what people believe to be true but simply isn’t so. Come back again to read more.