By Althea Chang | MainStreet.com

If you’re planning on getting a reverse mortgage, you’ll likely need a reverse mortgage counselor. In most cases, such a counselor is required.

Here are answers to some common questions about reverse mortgage counseling.

1. Why do I need counseling?
The U.S. Department of Housing and Urban Development requires a certified counseling session for a federally insured reverse mortgage, also known as a home equity conversion mortgage.

“This is a very important financial decision for a senior citizen who wants to make use of the assets they have available until they die,” says Sue Hunt, housing counseling program manager at Consumer Credit Counseling Services.

“We certainly don’t want to have seniors making decisions that aren’t well educated and well informed,” she adds.

2. Does everyone need counseling?
If you’re part of the majority of reverse mortgage borrowers choosing a federally insured reverse mortgage, you’re required to get counseling before you apply.

If your home is worth more than the $625,000 federal limit, you may want to apply for a reverse mortgage through a proprietary lender. In that case, you may not be required to get counseling, but it’s generally recommended, says Peter Bell, president of the National Reverse Mortgage Lenders Association.

Some lenders may first suggest that you speak with their own consultants to learn about your reverse mortgage options, but it’s not the same as official counseling from an independent HUD-approved counselor who’s certified to work with you on your options.

3. How do I find a counselor?
Reverse mortgage lenders are required to provide prospective borrowers with a list of 10 reverse mortgage counseling agencies. Five of the agencies must be local, with at least one a reasonable driving distance from your home. The other five must be national intermediaries such as AARP.

At HUD’s web site you can find national counseling agencies, as well as local HUD-approved counseling agencies. The counselors can meet face-to-face or provide counseling by phone.

4. What will the session entail?
In reverse mortgage counseling, you’ll get information and advice based on an analysis of your budget.

More specifically, you’ll discuss why you want a reverse mortgage. You’ll also review your current income, if any; debts, including an existing mortgage if you have one; your monthly expenses; medical expenses; planned home improvements; your current access to emergency cash and the possibility that you’ll move, either into a new home or a nursing home within a few years.

You’ll receive a projection of how much you can expect to receive from a reverse mortgage, Hunt says. And you’ll compare which lenders and payout terms would be best for you.

Reverse mortgage counseling has to be done in person or on the phone. It’ll take about an hour, or more if you have several questions. If it’s over the phone, it may take more than one call. (In North Carolina, counseling can only be done face to face.)

5. What do I need to bring to my counseling session?
“It’s a good idea, before your session is scheduled, to make some notes about how much money you’re making and how much your expenses are, including housing, utilities, food, transportation and medical expenses,” says Hunt. You don’t necessarily need to provide your actual pay stubs or bills, she says.

You’ll also want to know if there are any liens on your house, she says. In addition, although you don’t need an official appraisal yet, you may want to call a real estate agent who does business in your area, or visit Zillow.com to get an estimate on how much your home is worth, Hunt suggests.

If a lender has given you a projection of your reverse mortgage payout, bring it your counseling session as well, Hunt suggests.

6. How much will it cost?
The fee for a reverse mortgage counseling session is usually $125, but it may be waived if you’re facing foreclosure, bankruptcy, an immediate medical crisis or another hardship.

If you’re not facing an immediate hardship, but you can’t pay the fee, your counselor is required to work with you. A counselor with Consumer Credit Counseling Services, which offers reverse mortgage counseling nationwide, for example, may look over your income, debts and expenses. If your expenses are more than your income, CCCS will allow you to pay your fee from your reverse mortgage payout. If that payout is less than $7,500, the fee is waived, Hunt says.

Some counseling agencies, like the Catholic Charities of the Diocese of St. Cloud, Minn., provide free, independent reverse mortgage counseling.

“You’ll have to call and ask what their policies are,” says Bell. That may mean calling everyone on the list you receive from your prospective lender.

7. What is a certificate of HECM counseling?
A certificate of HECM counseling is written proof that you’ve received counseling.

The form cannot be filled out until your counseling is completed, and in order to process your application, your lender will have to have an original copy of the certificate signed by you as well as your reverse mortgage counselor, according to HUD. If you’ve had counseling by phone, you and your counselor may be able to send your lender separate original certificates, signed.

8. What if I’m acting as a legal guardian or have power of attorney?
A reverse mortgage counselor may require proof of your guardianship or power of attorney before conducting a counseling session. Around 5% of reverse mortgage counseling sessions conducted by CCCS are conducted on behalf of people who have a legal guardian or someone with power of attorney, Hunt says.

9. Who can I contact if I have a complaint about my counselor?
Contact the counseling agency your counselor works for. You can also contact your local HUD office and file a complaint with the person in charge of reverse mortgage counseling. The Federal Trade Commission also handles consumer complaints.

By Althea Chang | MainStreet.com

If you’re a homeowner 62 years of age or older and you need to supplement your income, you may be able to tap into the value of your home using a reverse mortgage to get money now.

Unlike a traditional mortgage, you won’t have to make monthly payments and your income doesn’t affect your eligibility, according to Peter Bell, president of the National Reverse Mortgage Lenders Association.

If you’re interested in getting a reverse mortgage, one of the major considerations is how much you can get. How much you get also varies on how you choose to receive your payouts. Here is what you need to know to get started.

How Much Can You Get?
The simplest way to figure this out is to use an online reverse mortgage calculator, where you plug in where you live, your age, your spouse’s age and the value of your home, says Bell.

How much you actually get is also determined by a variable: an interest rate that’s either calculated using the one-year treasury or the one-month London Interbank Offered Rate (LIBOR). The calculator on ReverseMortgage.org figures out interest rates for you and explains how it’s calculated. If your lender offers both an interest rate based on the treasury and one based on the LIBOR, you can discuss with your loan originator which one would be better for you. The LIBOR rate may be recommended, since a set margin means it carries less interest rate risk for brokers, but patriotic investors tend to choose the treasury-based rate, Bell says. Some lenders only offer one or the other. Both rates fluctuate.

About 90% of reverse mortgages, according to the AARP, are made through the U.S. Department of Housing and Urban Development’s (HUD) Federal Housing Authority (FHA) and their Home Equity Conversion Mortgage program.

Late last year, FHA-backed reverse mortgage loans were limited to between $200,000 and $300,000, depending on where you live. This year the American Recovery and Reinvestment Act raised the limit to $625,500.

Some proprietary lenders, such as Bank of America (Stock Quote: BAC), MetLife (Stock Quote: MET), Senior Lending Network and other national and community banks may offer higher-amount reverse mortgages, but such loans will not be FHA-insured.

Payout Options That Pay More
How much you can get also varies on how you choose to receive your payouts. You may choose a lump sum payout to pay off a single debt such as a credit card balance. If you need help covering regular expenses, you can receive monthly reverse mortgage payments, known as the tenure option, for as long as you live in your home. A similar option is to receive monthly term payments, which only last for a set period of time. Lastly, you can opt for a line of credit if you want backup cash in case of unexpected expenses.

As a general rule, the older you are, the more money you can get. If you’re younger, your loan amount will have to stretch over a greater number of years.

With a line of credit, your unused available credit increases annually, meaning you can have more access to cash as years go by. If you opt for tenure payments, even if they’ve added up to more than the value of your home, you’ll continue to receive them regularly for as long as you live there.

So what does this all mean in real terms? Consider these two examples of hypothetical neighbors in Sacramento, Calif.

Reverse Mortgage Example No. 1:
If a 70-year-old man and wife, 62, have a $200,000 home, and need extra money each month to help cover regular expenses, monthly payouts are determined using the age of the younger spouse.

According to the reverse mortgage lenders association’s calculator, the couple can get a lump sum of about $80,363; a line of credit for about $80,363 that increases by 4.6% each year; or monthly payments of $509 for as long as either one lives in their home, based on interest rates calculated using the one-year U.S. treasury.

With an interest rate calculated using the LIBOR, electing a lump sum would pay $88,119; a line of credit equal that amount plus a 3.90% increase per year; or monthly payments of $535 per month.

So, the best option for the couple would be monthly payments from a reverse mortgage with an interest rate calculated using the LIBOR.

Reverse Mortgage Example No. 2:
A 75-year-old widow has a home worth $625,000. She wants to make minor home repairs and have backup funds in case of an emergency or unexpected medical bill.

She can get a lump sum of about $364,372; a line of credit for about $364,372 that increases by 4.6% each year; or monthly payments of $2,593, based on the one-year U.S. treasury, according to the calculator.

With a home equity conversion mortgage pegged against the LIBOR, electing a lump sum would get her $382,952; a line of credit for that amount plus a 3.90% increase per year; or $2,633 per month.

The best option in this case would be a line of credit.

Once you have an idea of how much you should be able to get, discuss your financial situation and your income needs with a reverse mortgage counselor and a loan officer. When deciding what payout option that works for you, remember that you’ll still have to pay your real estate taxes, homeowners insurance, home repairs and mortgage insurance, too.

By Mark David | MainStreet.com

Whether you’re planning to sell your house in the next few years or you’re in it for long haul, if you’re thinking about renovating, it pays to put serious thought into which improvements to do. Since home values have plummeted (and may fall further still), you’ll want to be sure that any work you put into your place will provide a reliable return on investment.

First, consider which fixes and upgrades are absolutely necessary. Before adding a deck and hot tub, make sure the water heater, heating and cooling systems, plumbing and other mechanicals are functioning at top efficiency. Having the innards of a house in tip-top condition will give the homeowner peace of mind and a potential buyer will be reassured the property is well maintained.

Also paramount to consider is the location of the property. If a sits in an area where similarly sized and maintained properties sell for $300,000, splashing out $250,000 on a resort style pool, a temperature controlled wine cellar and a lavish master bathroom is probably not the smartest idea unless you’re planning to stay in the house for 10 or more years during which time property values can rise to meet the expensive upgrades. Here are 8 projects that will give a homeowner a big bang for their buck.

1. Paint. Paint. Paint. A fresh coat of paint (inside and out) acts like a really good facelift; Everyone will notice the house looks younger and better taken care of, but no one will quite be able to put a finger on what’s different.

2. Get A Green Thumb. It’s not always necessary to rip out an entire yard in order to give it a new look. A few new plants here, a small patio there is sometimes all it takes. If you’ve got extra bucks for an overhaul, consider xeriscaping – which is a way of naturally irrigating a property through landscaping. It will help conserve water and lower the water bill.

3. Upgrade The Kitchen. This is probably the most popular (and expensive) way to upgrade a home. Buyers in high-end areas expect high end kitchens so if the home is located in an upscale area go with the highest grade appliances and counter tops that the budget allows. If a full renovation isn’t feasible, consider re-facing cabinets, replacing older appliances and/or laying down a new floor tile for a more upscale look.

4. Replace The Siding. New siding can be a major expense but it gives back much of its cost back in increased value. If cedar shakes or wooden clapboard seem like too much maintenance, consider a fiber cement option like Hardie Board, which resists rot and stands up beautifully to the elements including seaside salt air.

5. Install New Windows. With the ever escalating cost of heating and cooling a home, replacing old, single pane windows with high quality and energy efficient double or triple pane models will not only save money every month on utility bills, any potential buyer will see the upgrade as money in their pocket. There’s also a nice tax write off. If you really want to save on the energy bill, consider solar panels.

6. A Better Bathroom. Like kitchens, bathroom renovations are pricey but they add tremendous value. If a full renovation isn’t in the financial cards, try updating and upgrading the hardware, faucets and lighting fixtures, a much less expensive way to give a bathroom a new look.

7. Finish The Basement or Add A Deck. Basements represent substantial and often under-used square footage that’s perfect for a game room, a family room or even an extra guest room. Decks increase the square footage for entertaining and make a house feel larger. Both projects can be costly, but both return well on the investment when it’s time to sell the house.

8. Open It Up. Older houses sometimes have choppy layouts. If money isn’t an object, opening up interior spaces so that it better suits a more modern lifestyle is an excellent project. If pockets are really deep, add some square footage…a private master bed and bath upstairs, a family room off the kitchen that opens to the rear entertaining areas for easy indoor/outdoor flow always add value and appeal to buyers.

By MainStreet.com Staff Writers

Buying a home for the first time can be an invigorating and scary experience. You may find the whole ordeal to be a bit overwhelming. Here are some pitfalls to avoid when you’re buying your first home:

1. Buying Before You’re Ready
Although you may hear people say you’re “throwing your money away on rent,” it isn’t always wise to buy a home. If you make a good salary and have an expanding family, the desire to own a home is natural, but you have to make sure that buying makes good financial sense. Start by evaluating your debt and income. You should cap your spending on a home at no more than three times your household adjusted gross income. Also, you should reduce your income by your debt. This is how much house you can truly afford. Most financial experts also recommend that you have eight to 12 months in liquid assets in order to be totally prepared for homeownership.

2. Not Asking Questions
For first-timers, being afraid to come off as too eager or annoying with questions can force you to miss important information. After all, smart people ask questions! Don’t be afraid to ask for definitions or explanations of everything, even if you think it should be something you know. You never know how much trouble you can get into by not understanding basic home buying terminology.

3. Underestimating Additional Costs
Just because you can afford your mortgage payment each month doesn’t mean that you can afford a home. You must also take into consideration closing costs, property taxes, home repairs and unexpected emergencies. In addition to these expenses, you should consider the costs of upkeep, including utilities, lawn care, security systems, pest control and annual maintenance.

4. Overestimating How Much You Can Afford
This goes back to being realistic about your income. Just because you’ve been approved for a loan amount doesn’t mean you can afford it.

5. Forgetting About Resale
This is a dangerous pitfall many people are contending with now that the market bubble has burst. They purchased homes that were “unique” or “needed work” but never got around to doing it. Now, they’re stuck with homes that are worth even less than they paid for them and still are in need of repairs. Which brings us to the next pitfall…

6. Thinking Home Repair Is Simple
This is a major no-no. Never assume a repair on a “fixer-upper” will be simple or cheap. Even if you are doing the labor yourself, the cost of permits and materials alone can set you back an enormous amount of time and money, so be prepared for this.

7. Forget About the Neighborhood
Be sure to visit any potential home at night as well as during the day. Remember, if you buy a home, you are buying the neighborhood also. Keep an eye out for the area’s progress. Is it on the upswing or in the middle of a downturn?

The new Make Homes Affordable plan will drop some homeowner’s mortgages down to 1%.

By Farnoosh Torabi | MainStreet.com

Recently a distressed reader wrote to me wondering whether he should stay in his Detroit home or just give up and walk away. His main gripe—like some eight million other Americans—is that his mortgage is far more than the home is currently worth. He isn’t building any equity and probably won’t at any point in the foreseeable future. So, should he just stop paying and let the bank deal with it?

My reader Michael (not his real name) has an extremely high interest rate of 8.6%, making his monthly payment roughly $1,850. Plus Detroit has the highest unemployment and foreclosure rates in the country, so a quick market recovery there is not likely.

“The area is starting to decline due to many vacant or vandalized homes with several break-ins, three for myself,” Michael writes. His credit is already poor, he says, and he no longer uses credit cards. He is married with two young kids.

More Reasons to Walk Away
More middle-of-the-road homeowners are grappling with the same issue as Michael. It’s not necessarily because they can’t afford their monthly payments, but because they are “underwater,” owing more on their mortgage than the home is currently worth. They’re not building any equity and when time comes to sell, they’ll probably be in the hole.

The IRS has made it less of a tax pain to give up on your mortgage by now offering special tax relief for financially strapped borrowers who lose their home due to foreclosure. Previously, so-called “forgiven” debt was considered taxable income.

As the fixed-income team at Credit Suisse noted at the end of last year, “Should the downward spiral in home prices, neighborhood condition and equity deterioration continue, more and more mainstream borrowers are likely to walk away from their homes.” Credit Suisse also predicted that more than eight million mortgages would enter into foreclosure over the next four years. That’s about 16% of all mortgages.

In Michael’s case, he definitely needs to move to a safer neighborhood. Three break-ins in one month is more than enough reason to flee. But should he abandon his mortgage? Should anyone ever abandon their mortgage? That’s an entirely different question, so I asked a few experts to weigh in: Joe Brusuelas, a director at Moody’s Economy.com (Stock Quote: MCO); Gerri Detweiler, a credit advisor for Credit.com and Jon Maddux, CEO and co-founder of YouWalkAway.com, a site that helps distressed homeowners learn about their alternatives, such as ditching their mortgage.

When It’s OK to Walk Away
Even for Joe Brusuelas from Moody’s Economy.com, who is not a fan of walking away from a mortgage, ditching your mortgage sometimes make sense. But it’s an exception, not a rule, he says. “There may be a narrow range of conditions under which walking away from a home that is so far underwater is rational,” says Brusuelas.

Here are some of the factors our experts say are extremely important to consider before making your decision. In any situation you want to speak to a bankruptcy attorney.

1. Your Bank Won’t Help (and Won’t Chase After You). Bottom line: Banks don’t want to go through another foreclosure process. It takes time and money. But if saying you desperately need to modify your loan fails to earn you any material help, then you may have to take matters into your own hands and walk away. Before you do, make sure your bank has no plans to chase you down and sue you for “deficiency” claims, says Detweiler of Credit.com. Those claims, depending on your situation, could end up costing thousands and thousands of dollars. Some states, like California and Florida, now prohibit deficiency claims. In other states, some lenders are choosing not to go after defaulted borrowers because they’ve got too much on their plates. But others aren’t so lenient.

“Until the statute of limitations is expired, I wouldn’t think I was in the clear,” Detweiler says. “[The lenders] may come after you in a couple of years after taking a deep breath.” Some attorneys recommend getting a signed letter from your bank stating it won’t sue you for deficiency claims.

2. You’re Not Able to Save. For a $1,000 fee, YouWalkAway.com guides you through the process of ditching your home. Of the 5,000 members who’ve signed up so far, many have decided to forgo their mortgage because they say they’re no longer able to save any money.

“They see [their home] as a major drain to their savings and cash flow in general. They don’t want to keep bleeding basically,” says Maddox, the CEO. If every payment on your mortgage is a step backwards from achieving your financial goals, a foreclosure, he says, may be a suitable path. Especially if you don’t see the area appreciating in value in the next five, seven or 10 years.

3. You’re OK with Damaging Your Credit. A foreclosure stains your credit report for seven years, much like Chapter 13 bankruptcy, which is a partial debt repayment plan. A Chapter 7 bankruptcy, which eliminates your debt entirely, sits on your credit report for 10 years. This means that for a period of time, you may have trouble getting a loan on another property.

“Ultimately, lenders make decision based on risk,” says Detweiler. “Lenders really shy away from serious negative items like foreclosure and bankruptcy.” It will take at least a few years before you can qualify for a new loan and your rates will be extremely high.

Another tip: Don’t let the potential consequences on your credit report decide between filing for a foreclosure or a bankruptcy. They’re both quite ugly. Instead, you should examine the bigger picture, figure out what your future goals are and what the best personal strategy may be for you. And talk to a bankruptcy attorney to weigh it all out. “The homeowner needs to focus on what is the best financial strategy for the next say, five years, versus trying to beat the credit scoring system,” says Detweiler.

4. You Need to Be OK With It. The decision to walk away from your home has been chastised by some in the press for being “immoral.” A contract is a promise, some critics argue, and therefore should be upheld no matter what. What’s more, foreclosing on your home potentially lowers the value of the neighborhood and hurts the economy.

Maddox, on the other hand, says there’s no moral obligation to keeping an unfavorable mortgage. Desperate mortgage holders should do what they can to help themselves get out of painful situations, especially when their bank won’t compromise. After all, he says, banks have no problem breaking contracts or writing off assets.

“If banks cut their bottom line by, for example, firing workers, they get applauded by shareholders. But guys struggling to pay for their kids’ college because their mortgage is too high, those guys get thrown under the bus and we say they’re dead beats, unethical and immoral,” he says.

Refinancing your home can be a great way to add a boost to your budget.  Lowering your payments can add cash to your budget to be applied to other debts, or to increase savings.  Is now the time to refinance?

Interest Rates are Low
Although they change daily, mortgage interest rates recently have been as low as 4.625%.  If your current mortgage is higher than this, it may be time to call a mortgage broker.  For every 1% change on $100,000 of 30-year fixed mortgage debt the monthly savings is approximately $60.00.  For example if you have a $300,000 mortgage at 5.625% and can refinance that amount down to 4.625%, your monthly savings will be $180.00 [60*3=180].  $180 per month is an annual savings of $2,160.

Do you carry more than one loan on your home?
If you can combine a first and second-mortgage into one payment the savings will add up quickly.  Most second mortgages carry significantly higher interest rates than the first, and if you have the opportunity to refinance the second into the first or into a lower interest rate it’s time to act.

How’s your credit?
The primary factor in the interest rate you will receive in a refinance is your credit.  It’s important to know your credit rating going in.  Everyone is entitled to one free credit report per year [www.annualcreditreport.com] Get your report and be aware of your rating before contacting a mortgage broker.

Beware of costs
Refinancing is not a free process.  Be ready to pay $3,000-$4,000 for expenses.  It is sometimes possible to “roll” this amount into the refinance mortgage, but one way or another you will be paying for the process to refinance.  Consider your annual savings ($2,160 on the example cited above) and the length of time you plan to live in your home.  If you will recoup the cost of refinance before you plan to sell the home, it makes sense to refinance.   But keep these costs in check.  Don’t be afraid to shop around multiple brokers for offers.  The charges can vary greatly.

Appraisal risk
One of the biggest risks in the current market is if your house will appraise for the required amount.  In order to avoid PMI your equity in the house must be greater than 20%.  For example, if your home is worth $350,000, your maximum mortgage amount should be $280,000 [20%*350,000 = 70,000].  If you plan to mortgage the entire $280,000 your home must appraise for more than $350,000 to qualify.

If low interest rates and combining mortgages are a good fit for you – it may be time to refinance.  Just beware of the pitfalls and costs before starting the process.

– By Michele Steinberg, Geezeo.com

By Althea Chang | MainStreet.com

Getting laid off is hard enough, but when a loss of income means your emergency fund is being drained to pay rent, you may be forced to downsize.  And you’ll have to convince a landlord to rent to you, when you have no money coming in.

When you’re unemployed, you’ll have to look at your whole financial status, including how long you think you’ll be out of work and whether you’re getting help from your parents, says LaLa Wang, president of MLX, a real estate services company that provides no-fee rental listings. 

“You probably want to be conservative,” says Wang.  “Live at home. Live with friends. Roommating is probably a less costly alternative to taking on the whole rent yourself.”

Broker

If you’re considering using a broker to find a cheaper apartment, find out what kind of background checks they do.  The main consideration will probably be your credit history, so know what’s on your credit report.

Many brokers work with large building management companies, which can have stricter credit score credit score, income and employment requirements. These days it’s doubtful you’ll find a broker who won’t ask for some proof of income. 

If you plan to live with a roommate or significant other who is employed, they should be the one getting their credit checked and income verified.  But remember, their name will be the one on the lease.

Friends and Family

If moving back in with your parents is out of the question, tell your friends and family about your situation.  With all the recent layoffs and pay cuts, you may know other people who are hard up for cash, need help with rent and are looking for a roommate to help make ends meet.

Local Listings

Through your local newspaper, Craigslist and other listings, you might have more luck connecting with an owner and renting directly from them. 

You might improve your chances by being honest and explaining your situation. You could mention your previous income, job prospects, savings and any severance payments and unemployment benefits you’re receiving. (Just remember not to post personal information like this online.)

“You may be able to work out a deal if you agree to pay an additional month’s security, or sometimes a whole year’s rent upfront,” notes Wang, who’s planning to launch a roommate matching service by the end of this summer.

Local listings like those on Craigslist often include week-to-week and month-to-month room or apartment sharing ads as well.

Get a Co-Signer

If you’ve been turned down by brokers and landlords and scoured ads in your local newspaper and online to no avail, you’ll need to find a co-signer or guarantor in order to get a new apartment.  They’ll be subject to even higher credit score and income requirements. And they’ll be taking a serious risk by agreeing to be held responsible for your missed payments, so don’t give them any reason to think they might get burned.

Buying a home is one of the biggest and possibly best decisions you can make (especially with the economy the way it is today). People are constantly lowering the price of their homes in order to get someone to buy and get it off the market. If you are looking to either rent or buy, here are some reasons that buying may work out better for you.

You Get Something Out of It – When you pay rent you are constantly putting money into something that you cannot call your own. Every month you pay rent but once your lease is up, the apartment is no longer yours. Putting so much money towards an apartment is very similar to throwing money away. In the end, you do not get anything out of rent once the lease is done. However, when you buy a home you could instead put money towards the mortgage instead and at the end of the day you have a house to call your own.

Appreciation Over Time – When you buy a home, the value of the home has appreciation over time. As time goes on, the value of the home gets greater (providing the economy is doing well) and when you turn around and want to sell your home you typically get more out of it than you paid, especially if you added a room or fixed up some areas of the house.

You Can Do What You Want with Your Own Home – When you rent an apartment you have to answer to a landlord. When you buy your own home you only have to answer to yourself. You can paint the walls, renovate the kitchen, and change things around as you like. When you rent, the possibilities are definitely not as endless.

Yes to Pets! – One of the hardest things about renting an apartment is that there is always the chance that you will not be able to move your pets in with you. Some apartments even charge rent to have your pet each month. Pets are expensive as it is without the cost of rent on top. When you own your own home, pets are not a problem and possibly you will have your own backyard for them as well!

You Can Get Roommates – If you are still young and haven’t yet started a family, getting roommates can help you pay the mortgage each month. Although you may have purchased your own home, there are still many young people out there that are more willing to pay rent each month. Another benefit of getting roommates is that you may find yourself with some extra cash to help you fix us your home or add your own little touches that you wouldn’t be able to afford otherwise.

Accomplishment – Owning your own home gives you an amazing sense of accomplishment. It is one of the biggest (if not the very biggest) decision you are going to make in your life. Although you may not be able to afford the biggest house on the market or even the nicest, you will find a home that you can call your own and one that you can make whatever changes to that you feel necessary.

After all things considered, the decision is still up to you, however definitely take some of these things into consideration when you decide whether to rent or buy. Also, do not forget that purchasing your own home is not without its issues.

— By Hannah Waters, Geezeo.com

Photo By: Roxanneh

By Jeffrey Strain | MainStreet.com

Owning a home may be the ultimate symbol of financial stability, but there are plenty of reasons to keep renting.

Now that home prices have tumbled from their highs, more people are trying to take advantage of the weak economy and buy a house. Before jumping in, it’s important to remember that home ownership can increase your living costs and tie up your cash. Consider these six potential issues:

Financial risks: Contrary to popular belief, home prices don’t always go up. Even if prices decline at double-digit rates, it’s impossible to know if prices will rebound or keeping falling.

Getting stuck: Most people who purchase a house plan to live in that city for a significant amount of time. What they often don’t realize is that if circumstances change, they might be stuck if they want to move.

For example, if you lose your job, it might make sense to move to an area with more professional opportunities. However, if the city in which you live is in decline, it may be tough to sell your house. It’s easy to pack your things and move out of a rented apartment, but selling property requires more planning and time.

Maintenance: Owning a house requires regular repairs and upkeep, which landlords typically take care of when you rent. Delaying maintenance when you own isn’t always an option.

Longer commutes: Houses becomes more affordable the further away they are from a city. If you must move to distant suburbs to be able to buy a home, your commuting expenses would likely rise along with the time it takes to get to work each day.

Additional costs: People often compare rent with mortgage payments when trying to decide whether to own. They forget that homeowners also pay property tax, buy insurance and make repairs. They might need to purchase appliances and lawn equipment they typically wouldn’t need as a renter.

When it’s time to sell, you might have to make costly upgrades and hire a realtor, who will charge a commission.

Cash might be difficult to access: People who view their homes as investments must sell them and move to cheaper properties and regions to reap the returns. If they can’t sell, they might have to resort to home equity loans or reverse mortgages to access cash.

If you put all the extra money you save by renting into your retirement account, you might be able to save more money than you would have by owning a house.

Related articles:

• Cramer: Home Mortgage Alert Part II: Your Map to Lower Mortgage Payments (geezeo.com)