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The Hidden Costs of Owning a Home

23 May 2012

Posted by Joseph Coupal

Low mortgage rates and more affordable home prices are creating an interest in homeownership by those who live in apartments. However, potential buyers who are unprepared for the true cost of owning a home may be shocked by the bite homeownership can take out of their wallet in addition to their mortgage payments.

Inspection and Appraisal Fees
Before you purchase a home, you need to pay for a home inspection, and an appraisal, possible even inspections for pests or radon. The costs of these inspections are borne by buyers and are a necessary protection to avoid buying a flawed property or paying too much.

Closing Costs
Buyers need to be prepared with the cash for anywhere from 2% to 4% of the mortgage balance depending on your area.

Taxes
As a homeowner, you'll need to pay property taxes, which are generally part of the escrow you pay into each month. Remember, even if you have a fixed-rate home loan, your property taxes could go up and increase your monthly housing costs.

Insurance
Your lender will require home insurance, the cost of which depends on factors including the construction materials of your home and the location. Even if you have renter's insurance, you'll find that home insurance costs more because you are paying for the ability to rebuild your home in addition to replacing your personal possessions. Insurance costs will rise over time, and you will need supplemental insurance if you live in a flood zone.

HOA and Condo Fees
If you buy a home within a homeowners' association or a condominium association, you'll be required to pay a monthly or quarterly fee. These fees can rise, or your association may need to charge a special assessment for projects such as repaving the parking lot or repairing a roof.

Utility Bills
Depending on where you live, your costs for electricity, gas and water could be higher when you move into your own home than when you live in an apartment. You may also need to pay for garbage collection along with your Internet, cable and phone bill.

Furniture
While this is essentially a discretionary expense, most people who move from an apartment to a larger home need to buy at least some new furniture.

Lawn Care
Whether you handle your yard work yourself or hire a professional, you will have to pay something to keep your landscaping in check. Lawn equipment can be costly and you may need a snow blower or a leaf blower, too.

Maintenance
Home maintenance costs time and money. While you may be able to change your furnace filters, clean your gutters and keep your appliances running smoothly yourself, you may also need to hire a contractor to clean and inspect your chimney and to keep your heating and air conditioning system in top shape.

Repairs
While maintenance tasks can be predictable, the most costly part of homeownership typically comes with unexpected repairs such as replacing or repairing the roof, removing a tree, or paying for mold mitigation in a damp basement. The list of possibilities is endless, so homeowners should set aside savings for an emergency. Experts suggest budgeting for 1% or 2% of your mortgage balance as a yearly maintenance and repair fund.

The Bottom Line
Buying a home costs more than you think. If you don’t expect to stay in your home for at least seven to 10 years, for more information visit HHHunt Rent vs. Buy.

SF Gate

The New American Dream Through Renting

16 May 2012

Posted by Joseph Coupal

In the American mind, renting has long symbolized striving rather than achieving. But as we climb our way out of the Great Recession, it seems something has changed. Americans are getting over the idea of owning the American dream; increasingly, they're OK with renting it.

Homeownership is on the decline, and renting is on the rise. But the trend isn't limited to the housing market. Across the board, Americans are increasingly acclimating to the idea of giving up the stability of being an owner for the flexibility of being a renter. This may sound like a decline in living standards. But the new realities of our increasingly mobile economy make it more likely that this transition from an Ownership Society to a Rentership Society.

The unsentimental fact about the American dream is that Americans never really owned it in the first place. For the past three decades, especially, consumers haven't so much bought their quality of life as they've borrowed it from banks and credit card companies.

Now consumers are following the example of corporations, becoming more efficient. And it starts at home.

Housing is the biggest single component of consumption in the U.S. economy and the source of much of our present misery. The typical consumer spends about 32% of his or her budget on shelter. In the last decade, that generally meant borrowing a lot of money to take "ownership" of a home.

During the boom, the home ownership rate grew steadily, peaking at a record 69% in 2006.

Ownership-boosters failed to note that homes purchased in 2005 and 2006 with no-money-down, interest-only mortgages weren't really bought. They were simply rented until the "owner" flipped them or walked away from the mortgage.

In the post-bust climate, renting has emerged as a much more economically efficient way to pay for housing. A one-year lease represents a far less onerous financial obligation than a 30-year mortgage. It's difficult to get into too much financial trouble as a renter. The home ownership rate has fallen from its peak in 2006 to 65.4% today.

For an increasing number of Americans it makes more sense to rent. According to Moody's, by late 2011 it was cheaper to rent than to own in 72% of American metropolitan areas, up from 54% a decade ago. And the more people who do it, the more socially acceptable and desirable it becomes. The decline in the ownership rate means that about three million more households rent today than did at the height of the bubble.

It's tempting to view the rise of renting as an economic step backward. But many would argue the rise of renting is a sign of a system adapting to new realities.

The U.S. economy needs the dynamism that renting enables as much as, or more than, it needs the stability that ownership engenders.

And the rising popularity of renting is hardly contained to the housing market.

Finally, perhaps, Americans are absorbing a piece of wisdom from Thoreau: "And when the farmer has got his house, he may not be the richer but the poorer for it, and it be the house that has got him."

Read more information on Rent Vs Buy, visit our website by clicking HHHunt.

Wall Street Journal

4 Reasons to Rent an HHHunt Apartment!

04 Jan 2012

Posted by Joseph Coupal

Many people are told when they are younger that renting is only for college graduates or people who cannot afford to buy. Many parents hammer these ideas into their children and tell them that renting is equivalent to throwing money away every month. Fortunately, today people are beginning to finally think for themselves and challenge these ideas. Here are 4 reasons to pat yourself on the back for deciding to rent an apartment home at an HHHunt Community!

1. Renting can save money

At the very minimum you’ll be shelling out PITI for your home. That is:

  1. Principal
  2. Interest
  3. Tax
  4. Insurance

The PITI doesn’t include property maintenance like maintaining the yard, paint, plumbing, repairs, decorating, etc… When you rent an apartment at an HHHunt community, the monthly payment is almost always quite a bit less than the PITI in your area and there are no maintenance expenses!

2. Homeowners’ tax deductions are overstated

According to research quoted by MSN, “… half of homeowners don’t get a break, because even with mortgage interest and property taxes, their total deductions do not exceed the standard federal tax deduction ($11,900 for couples and $5,450 for singles)”.

For these folks, it’s like spending $100 to save $20. They’re better off saving the difference and investing it. Even if there is a “break” on your taxes, you typically had to spend more than you would have spent to rent to get back that $20 for every $100 spent in interest payments.

3. Renting gives you flexibility

For the up and coming young professional, you’re better off renting and saving for a few years than to buy a small condo. Who knows how fast you will outgrow it? When you own a home, you can’t always sell it when you need to sell it at the price you want to sell it in order to accept a new employment opportunity. If you have owned a home and don’t want the constant maintenance responsibility, renting gives you the opportunity to enjoy your weekends instead of completing that “to do” list.

4. Our superb service teams!

Most apartment communities offer 24 hour emergency maintenance and technicians who are skilled in HVAC, plumbing, and electrical. At an HHHunt Community, our service teams take great pride in offering prompt and professional service to you. Whether you need a light bulb changed or a new compressor for your AC unit, we are there to take care of you as fast and efficient as possible. We are always a phone call or email away and most service requests are performed on the same day or within 24 hours!

Our Communities

Ashton Pointe Apartment Homes - Beaufort, SC
Foxridge Apartment Homes- Blacksburg, VA
Abberly at West Ashley Apartment Homes - Blacksburg, VA
Auston Woods Apartment Homes - Charlotte, NC
Abberly Village Apartment Homes - West Columbia, SC
Abberly Crest Apartment Homes - Lexington Park, MD
Old Mill Town Homes - Lynchburg, VA
Walden Pond Apartment Homes - Lynchburg, VA
Abberly Green Apartment Homes - Mooresville, NC
Abberly Place Apartment Homes - Garner, NC
Auston Grove Apartment Homes- Raleigh, NC
The Gardens at Twin Hickory Apartment Homes - Glen Allen, VA
Honeywood Apartment Homes - Roanoke, VA
Pebble Creek Apartment Homes - Roanoke, VA
Westwind Apartment Homes - Roanoke, VA

The Choice Between Renting and Owning

06 Dec 2011

Posted by Joseph Coupal

The housing market is stagnating right now and real estate brokers would have potential buyers believe that there is no better time than the present to buy a home. It is true, prices are down and mortgage rates are at all-time lows.

Unfortunately for the real estate brokers, many clients are not persuaded by that logic. Instead, in increasing numbers, they are choosing to rent instead of buy — unconvinced that the housing market has yet hit bottom. Would be buyers also understand that unless you plan to stay in your home for more than 10 years, buying a home may not be the right investment for everyone.

With apartments in Virginia, North Carolina, South Carolina, and Maryland that are conveniently located near downtown and offering apartment amenities that can’t be found in homes; renting is a great option for many. There is also a broad mix of tenants in the Virginia, North Carolina, South Carolina, and Maryland community: young single residents and families and empty-nesters that no longer have homeownership on their wish list.

Don’t believe the Hype!

23 Nov 2011

Posted by Joseph Coupal

One of the most popular home ownership myths in this country (Raleigh, Charleston, Charlotte, etc) is that owning a house is a huge tax break. I don’t know how many times that people have personally told me that they want to buy a home because they NEED a tax deduction! I just shake my head in disbelief because I have done the math. If your mortgage interest and other qualifying expenses such as charity contributions aren’t more than the standard deduction, ($11,600 for joint filers in 2011), there is no tax advantage to owning. Assume that you buy a $200,000 house with a 5% downpayment at a 6% interest rate. Your mortgage interest for the year would be $11,336. The Standard Deduction for join filers is $11,600. In this example, there is NO TAX BENEFIT. Even when there is a tax benefit, you most always have paid much more money to maintain the house than you are saving in taxes. If your mortgage interest is more than the standard deduction and you choose to itemize, there is little to no advantage. For example, assume that your mortgage interest in 2011 is $15,000. This would be an additional $3400 you would get to deduct if you itemize BUT you spent $15,000 in mortgage interest to save $850 on your taxes (assuming 25% tax bracket). And, you had all of the other expenses of home ownership that you would not incur when renting an apartment home at an HHHunt community!


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