Personal Finance

Owning a home is better than renting for the great majority of people. Although the mortgage lender pockets the interest, the principal amount paid on a home mortgage returns to the homeowner’s pocket as home equity.

A home is most people’s biggest investment. In contrast, the entire rent goes into the landlord’s pocket, leaving the renter with nothing to show for all of their years paying their landlord’s mortgage. Although landlords are responsible for property upkeep and maintenance, many landlords shirk this legal obligation in order to profit even further from tenant’s rent.

Renting is most advantageous to those who do not anticipate living in one area for long, or those for whom property maintenance and upkeep isn’t possible. Most renters appreciate the advantages of property ownership, and yet remain stuck living under someone else’s roof, paying for someone else’s mortgage. Many prospective homeowners remain segregated from the property ownership ladder until they’ve saved sufficient funds to apply to the home mortgage down-payment, and other initial fees associated with the purchase of residential property.

As thirty percent of adult Americans do not own a home, mortgage lenders also appreciate the vast, untapped market of people interested in home ownership. Mortgage lenders introduced a range of special home mortgage products in recent years geared to supply this untapped demand from people with low income, low net wealth, or low credit scores. Unfortunately, these so-called sub-prime mortgage products were packaged deceptively, and peddled recklessly, leaving many first-time home buyers with an ultimately unaffordable mortgage, and the housing market in an unsustainable buying frenzy of quickly rising home prices. The property buying frenzy has now subsided. Home prices are beginning to return to realistic values as lenders reassess their products and services in a more realistic light, such as sell and rent back agreements.

Now may be a good time for the prospective home buyer with sufficient savings to reconsider buying a first-home, or just a more affordable next home. Before sealing any deal, the prospective home buyer would be wise to thoroughly research affordable home mortgage products, comb through all of the fine print, and ask many questions of the lender, realty agent, and home seller.