Why Are You Still Paying Your Landlord's Mortgage?
I work with a lot of first-time buyers, who, sometimes with a little trepidation, make that step and then look back and ask themselves why they waited so long. In just a few years, they have paid down their mortgage and saw their property appreciate. Each year, they see their net grow and grow.
I also know many others that are thinking of buying but never make it happen. Meanwhile, they continue to pay their landlord's mortgage and fail to build up any real wealth.
I have heard just about every reason why people don't buy, some are good reasons and some are lame rationalizations. Here are the most common ones I have heard.
- I don't know how long I will be in the area.
- I can't afford it.
- I don't have the down payment.
This is probably the one I hear most. DC is a very transient city and people come and go from this area all the time. When I first moved out here after college, I didn't have any long-range plans. Twenty-five years later, I'm still here.
For some people, this is a legit reason. If you know you won't be here for more than two years, financially, it is probably better not to buy. If you are here on a definite short-term work assignment or school or military deployment, then hold off.
For the majority of people that tell me they don't know how long they will be in the area, five years later, they are still here. And in that five years, they paid $120,000 in rent (using an average of $2,000 a month) and have nothing to show for it. Meanwhile, if they had bought, they could have built $25,000-$50,000 in equity. That's real money to a lot of people.
This is a legit concern but how do you know you can't afford it? For many people in this area, you can buy a place for roughly the same amount you pay in rent each month. In addition, there are many different loan programs tailored for first-time buyers. You might be surprised what you can afford. A call to a good loan officer can answer most of your affordability questions. If you need a few recommended lenders, let me know.
This is similar to the 'I can't afford it'. Many buyers have the misconception you need 20% down to get a mortgage, but that is simply not true. There are many different loan programs and even some sources of down payment assistance depending on your income level - and in this area, the threshold is quite high.
I don't know how long I'll be in the area.
- I haven't found the perfect condo yet.
- I'm not sure what I want.
- I'm not sure where to start.
- I don't have a job.
- I want to get married someday and don't want to be tied down.
If you are searching for that one perfect condo, you are going to be searching for a long time. Instead, separate your needs into 'must have' items and 'nice to have' items. Once you make this distinction, which usually doesn't happen until after you start looking at places, and look for places that have all your must-have items but only 70-80% of your nice to have items, you will find something. In addition, keep in mind your first place will not be your last place.
Most people don't know what they want when they begin their search but don't let that stop you from starting. I find that many buyers only have a rough idea initially, but when I ask some more probing questions about their priorities and we start viewing condos in person, they find clarity.
Most people only buy a few homes in their lifetime so it is understandable they are not sure where to start. There is where a good agent earns their value. I've helped hundreds of buyers and I'm sure I can give some guidance to you. Feel free to reach out if you want to discuss your needs and situation.
This is a good reason not to buy. In fact, unless you plan on paying cash or have some other source of income, you won't be able to buy. So, yeah, get that job first, put yourself on a budget and start saving.
If you are in a serious relationship, this is a legit reason to hold off. However, when I hear this from someone that is not even in a relationship, I find it ironic that they will lock themselves into a lease for a year or more, but won't buy a place. Oh and just remember, nothing says you can't rent your place out or sell your place if you find your soul mate along the way.
So what is your reason for holding back? When are you going to stop paying your landlord's mortgage?
