To Rent or To Buy .... ft. Amelia Ross

Curious to know the pros and cons of buying versus renting? Get your cups ready! Amelia Ross joins to spill the tea.
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Want more Amelia? Find her here:
https://www.hyderealestate.com/agent/detail/8340022
Instagram: @ameliannelv
Facebook: @ameliaross

Transcript

Jillian Hyde : 0:00

Welcome to The Real Tea podcast! We're Jillian and Catherine Hyde, Vegas dwellers and real estate sellers. Want the real tea on realty? Let us pour you a cup. Learn all about the ins and outs of Las Vegas and how to set yourself up for financial success. Thanks for tuning in. Let's sip some tea. Thanks for tuning in. Today we're discussing reasons to stop renting. I'm joined with Catherine and Amelia. Ladies, tell me the advantages of owning now.

Catherine Hyde : 0:31

Well, you get to build your own wealth. What do you think?

Amelia Ross : 0:35

It's an investment into yourself so you can put your money towards something that you're owning rather than someone else's owning? Absolutely and oftentimes renting costs the same, sometimes even less than renting. So, renting you have to pay someone else.

Jillian Hyde : 0:57

Now what does that money go towards? Is that go towards their warranty? Like what does that mean?

Catherine Hyde : 1:03

You're paying them for the use of their home. So assuming they have a mortgage in place, you're paying their payment, or you could easily be paying for your own mortgage payment.

Jillian Hyde : 1:13

Right. So the prices would either be lower still the same, depending on

Catherine Hyde : 1:18

it can I mean the, I think what we'd like to highlight here is the reasons why you should stop renting. One, owning a home is oftentimes and this is across the country, except for the major metro area sometimes is cheaper to own than to rent. So that would be my recent one. What would you say would be the second reason?

Amelia Ross : 1:42

Um, I would say that right now, interest rates are at a historic low. So when you are renting they usually ask for first month's rent, last month's rent a security deposit, a pet deposit, you have that all these different fees that are, you know, add up to a large lump sum of money that you could be putting towards a down payment. And with the interest rates being lower, you're able to still have that same monthly payment and a home either at the same price or higher, and your monthly mortgage payment doesn't go up. Interesting. So let's say you don't have enough money to purchase a home or that's what it seems like there are loans in place to help you purchase a home. So what is that? That's called downpayment assistance, and it depends on your individual's qualifications, their various programs. But the point that Amelia was making is that by the time you add up all of those deposits first and last month, etc, you probably have almost all of your downpayment already, you just don't realize it because it's downpayment sounds so much larger. Another big thing with the interest rates

Catherine Hyde : 2:59

for example, if you finance $300,000 today at 3%, your principal and interest payment on that is about 1200 dollars. If we wait and the interest rates go up, say six months from now, because we don't know what they'll do in the future, but let's assume a rate increase to 4%. That same $300,000 loan principal and interest goes up to 1360. That's $160 extra every month for the same house. Same everything, but it cost you another $2,000 a year. Like, that's a lot of money. That's a luxury vacation,

Amelia Ross : 3:35

you're loaning that money towards your owning instead of, you know, someone else's owning

Jillian Hyde : 3:41

and it all adds up at first you it doesn't seem that bad, but then it just builds. So let's talk about FHA loans. What are those? How do they benefit a potential buyer? I think that's

Catherine Hyde : 3:55

another good race. Another good option for somebody who's thinking about Oh, ownership, it makes it easier to qualify. Oftentimes one thinks I want to buy a house, I need to have perfect credit, I need to pay off all my debt etc. My FICO score is, you know, I might have a little blemish here or there. But that's actually not fact. You don't need perfect credit score. What do you what has been your experience for the average FICO and the average FICO that needed for FHA is around 620. Okay, and I think with most lenders, we may run into especially now after the COVID-19 guidelines and the changes to the financing, it's gonna be more like a 640 minimum, but that is still considerably lower than say, a conventional financing where that's often in the high six hundreds, almost seven hundreds to make that pencil out.

Jillian Hyde : 4:52

So, equity, what is that that's an advantage for homeownership? How does that benefit you?Short term long term, what does that entail?

Catherine Hyde : 5:03

I think that's my favorite reason for ownership.Because when you rent you know that rent is going to go up, never that's your landlord come and say, guess what, now that we're renewing, we're going to lower your rent that never happens. What does seem to happen across history is that property values go up. And that's your equity. You paid 300 for your home, and five years later, that home is worth 333 50, that extra 30 50,000 increase in value. That's your equity. That's the money that you've made simply by living somewhere. So when you own a home, and equity rises, property values go up, that money is yours. And then you can do whatever you want with it.

Amelia Ross : 5:52

Right? You can, you know, improve the home you could buy a fixer upper and put the money into it and that adds value to your home and more equity there. There's definitely great deals to be had out there. So it's a great investment into yourself, and you can hold on to that equity forever or use it to invest again.

Jillian Hyde : 6:15

Yeah, and I think that's something that scares a lot of people who are looking to rent, they want something, you know, what if you don't want to stay in that home after a year or three years or whatever, but equity allows you a little more leeway. So you can just leave like you'd rent or terminate a rent lease, right?

Catherine Hyde : 6:33

Absolutely. It's It's yours. You have the power, you're not bound by any one term. If you needed to, you could refinance or get your equity out and use your cash for school. I mean, you don't have to use it to reinvest in the home. It's just

Amelia Ross : 6:49

yeah.

Catherine Hyde : 6:51

Again, building your wealth, it gives you access to something else for yourself.

Jillian Hyde : 6:56

And so let's talk about tax breaks which is another pro for purchasing a home? How does what does that mean?

Catherine Hyde : 7:03

Well, when you purchase a home, you're going to borrow money. The bank's make charge you an interest that is their profit. But that interest is a tax write off for most individuals. So in addition to gaining equity, when it comes time for you to file your tax returns, you can deduct taxes and and other expenses like property taxes. So it makes your annual tax liability as a citizen as a resident much lower and that just adds to the little bits of savings that you can add to your bottom line every month.

Jillian Hyde : 7:40

So let's elaborate on just the let's recap all the pros what what do you guys think is the biggest thing bottom line?

Catherine Hyde : 7:52

I think the even if you think I want to buy But I want to buy something that I like more. So it's going to be bigger and it's going to be slightly more in monthly payment. I think it's really important to compare it exactly. Because it's never going to be apples to apples. It's not just the payment, it's the additional tax break. It's the long term growth in in your in your own wealth. All of those numbers add up beyond just tax savings beyond just equity, definitely beyond just a monthly payment. So it's an opportunity to save money now save money for the future, and give yourself some choice. It'll be an individual decision for anyone, but we can review your options. Yeah, definitely. And just buying a home being a home owner offers more freedom, you have the equity, you have the tax breaks, and you know, saving cash is always the way to go. So I agree. You don't have anyone else's terms or regulations to follow. It's It's yours.

Jillian Hyde : 9:00

And if you're still on the fence, you can always contact real estate experts like Catherine and Amelia to help you and they can do the math for you even better. So, again, ladies,

Catherine Hyde : 9:12

thank you.

Amelia Ross : 9:13

Thanks

Jillian Hyde : 9:14

Thank you for listening to today's podcast. Want more Real Tea? Hit subscribe and leave us a review. Check out Hyde Real Estate .com for more real estate opportunities and as always, stay thirsty!