Renting vs. Buying a Home

By: Raevyn Jones, Marketing Coordinator, NHS of Baltimore

One of the biggest financial debates of all time is arguably the topic of renting vs. buying a home, which one is better? As June is National Homeownership Month, many columnists are putting out articles maintaining that it is more advantageous to be a buyer instead of a renting.

A huge misconception is that the amount of money a renter spends on rent can be about the same as or less than the amount a homeowner spends on mortgage. However, what people fail to realize is that when it comes to renting vs. buying, the tax incentives for homeowners can save them a significant amount of money. For example, a renter may start out paying $800 per month with annual increases of 5%, a homeowner on the other hand can purchase a home for $110,000 and pay a monthly mortgage of $1,000. With the tax savings of homeownership, after six years the homeowner’s payment will be lower than the monthly payment of a renter.

Other advantages to homeownership are that it builds stability, people are free to change décor and landscaping, and you do not have to depend on other people to maintain the property. The only advantages to renting as oppose to homeownership is that it is much easier to move and there is little or no responsibility when it comes to maintenance.

Before people make the decision of whether to rent or own a home, they should utilize their resources and find out which is better for them. Talking to a homeownership advisor or simply taking a financial literacy course can help you figure whether you should become a homeowner and if your finances will allow you too.

In the meantime, many people who have accomplished the dream of homeownership are celebrating, as June is national homeownership month. Homeowners can visit the HUD website to find local homeownership events in their area.

Foreclosure: Disadvantage or Advantage

By: Raevyn Jones, Marketing Coordinator, NHS of Baltimore

Unfortunately with the state of Maryland having one of the highest foreclosure rates, many residents this year will face foreclosure and wonder what the next step is. The first step in dealing with foreclosure is to completely understand the process, and know what advantages and disadvantages it may offer. The most significant thing to be conscious of is that foreclosure is not the end of the world.

Although being faced with foreclosure is never pleasant, people who face foreclosure today are in a much better position than people who have faced it in the past. Because of the increasing amount of foreclosures in many areas across the nation, the range of options and resources for those in such situations has significantly increased. From federal government to local government, as well as a variety of community organizations and non-profits who specialize in foreclosure prevention; there are numerous efforts and programs aimed at keeping struggling homeowners in their homes and out of foreclosure.

Today lenders are more willing to help homeowners through a difficult period than they were in the past. One of the most important things is to act fast as soon as you begin to struggle with your mortgage and thing you may be facing foreclosure. There are real options today in regard to foreclosure prevention and losing your home is not the only answer.

For those who feel that there is no other solution to their homeownership problems other than foreclosure, they need to understand that walking away from a mortgage that you still may be able to pay has consequences. One of the major cons to foreclosure is that your credit score will be affected and may be impossible to get credit for a while.

Many people who walk away from their mortgages have the misconception that they can simply raise their credit scores again by paying all of their bills on time and eventually finance another home purchase. Typically homeowners who face foreclosure due to economic hardship, such as a job loss or divorce, normally must wait two to five years before buying a home again. On the other hand, people who walk away may face double that time frame before they are able to purchase another home.

Facts show that the advantages to foreclosure are slim to none in comparison with the long list of disadvantages. It is in the best interest of anyone facing foreclosure to act immediately by seeking counseling or programs that deal with foreclosure prevention. Simply settling for foreclosure without a fight will have disadvantages at the moment and for the long haul.