Not-So-Glorious Home Ownership

According to any number of experts in the media, political arena and at backyard barbecues, we should all own our own homes.  Home ownership has always been a goal in the United States as it makes a statement about the stability of your income and makes you a better citizen, among other things.  Homeowners have long been extolled as being pillars of the moral society, being more involved in the community, and having more educated children.  But how much of that is fact, and how much is mere propaganda? 

Recent numbers have certainly shown that far too many Americans own homes that they can not afford.  Mortgage delinquency is rising as more mortgage payments are slipping seriously past due.  These homeowners fell victim to irrational pressures that push home ownership on the American people.  People that are now trying to recover from financial loss associated with an unsustainable mortgage loan, credit problems and personal problems stemming from the desire to follow the propaganda pushing the American dream.

Is Home Ownership for Everyone?

If propaganda is to be believed, we should all own our own homes.  Unfortunately, many people buy into this belief but fail to consider if, in fact, owning and maintaining their own home is really the right personal decision.  There is no doubt society is telling you to buy a home.  But it may very well be that your bank account, your lifestyle and your career are sending a very different message entirely.

There are many home loan programs available from the government and banks that have helped low income families become proud home owners with reduced mortgage down payment programs.  Unfortunately, many of those homeowners are now staring at rising mortgage payments and imminent foreclosure.  Many of these families and individuals took advantage of the sub prime lending craze that swept the nation in recent years thanks to overall low interest rates, low mortgage rates and in some cases additional government assistance.

Now, with mortgage rates creeping back up, mortgage loan payments are coming up too and money is getting tight.  When these sub prime buyers are unable to pay their mortgage, they face eviction and foreclosure.  Mortgage refinancing, which seemed like a viable option for mortgage payment relief, became more difficult and often involved an even higher mortgage rates.  Not only have they lost any investment up to this point, they have also lost their credit rating and their pride.  It’s hard to feel good about yourself after being kicked out of the home you were so proud to own a few short years ago as well as losing the mortgage down payment funds and any other money that may have allocated to make previous mortgage payments and housing maintenance.

Don’t Buy a Home

Home ownership isn’t for everyone.  When you own a home you must have time and money to spend maintaining that property.  You must learn how to cut and edge the lawn and how time consuming driving from the suburbs to the city can be.  Many city dwellers who buy a home in the suburbs chafe at the sudden isolation and removal from community activities.

Others find their free time now consumed by drives to and from work every day.  Still others realize that paying homeowner association dues and property taxes isn’t as much fun as they were anticipating.

Many homeowners are not only overwhelmed by the new mortgage payment, referred to as payment shock in the mortgage industry, especially when the home loan is based on an adjustable rate mortgage but are also unpleasantly surprised over the cost of maintenance.  Maintenance does not just mean maintaining the yard and cleaning but unlike a rental unit in which the structure is maintained by the landlord, your home physical structure including plumbing, electrical and physical wear and tear is maintained by the home owner.

Buying a home isn’t the right choice for many people.  If you are in a career that relocates you often, you may be frustrated trying to sell home after home and losing money in mortgage closing costs and commissions.  You may also not be an ideal candidate for home ownership if you are at retirement age.  Many retirees would do well to sell their homes (along with the maintenance they represent) and find a high-quality, well maintained rental instead.

But Is It Better To Own a Home?

There is some truth to studies that children are more successful academically in families that own homes.  There is no difference between those children and children of long-term renters, however.  It seems the mobility of families, not the home location is a factor in educational success.  Your children will do just as well in a rental as a home, so long as you live there for a long period of time.

Home owners are not necessarily more involved in the community or better citizens, either.  Again, the longer you are in a community, the more involved you are likely to become.

As evidence, you can look too many of the cities in Europe.  In the United States, 70% of citizens own their own homes.  In the well-educated, successful country of Switzerland, only 34% of residents own their own homes.  In Berlin, a mere 11% are homeowners.

Perhaps your desire to own a house springs more from the pressure around you than your actual desire to plant a garden or build a porch.  Consider strongly your motivation before following the rest of the country into the home buying craze.  Study your own personal choices regarding time and your budget for both the mortgage loan down payment and the monthly mortgage payments.  Investigate the mortgage programs available and mortgage rates and do not fall into a false sense of security believing that you can always refinance a high mortgage rate into another home loan.  The mortgage calculators may be especially helpful in determining mortgage options and mortgage payments.  But, the mortgage calculator and mortgage rates can not determine if the work, time and investment in home ownership matches your individual goals and needs.