Just Look at Your House This Way
December 29, 2010
When I opened my Wall Street Journal this morning, it was filled with articles bemoaning the rate of recovery in the housing marketplace. It brought to mind a new way of looking at home ownership. (This may need to be "R" rated as it is a bit on the tongue-in-cheek side.)
Let's assume that the basic needs of human beings are food, clothing and shelter. Some of us rent, some of us buy a home and some are still seeking shelter wherever it can be found.
Renters make a payment to a landlord in exchange for the right to occupy a property owned by the landlord. The landlord has the right to impose some rules - no colored paint on the walls, no nails to hang pictures. no parking in the driveway, etc, etc. The landlord can raise the rent and not renew the rental agreement.
Homeowners make payments to a lender. They can paint the walls any color they wish. They can hang as many pictures as they wish. They can park on the driveway, They can tear out walls, put in new appliances or do whatever strikes their fancy. As long as the homeowners make the payments specified in the note and trust deed, the lender cannot evict them or increase their monthly payments.
The similarity between renters and homeowners is that both are required to make payments to someone else.
The difference is that the renter doesn't care whether the value of the house goes up or down. The homeowner does.
Perhaps homeowners whose loans are more than the present value of their homes could just look at themselves as renters with extra privileges. Then they can stop focusing on what they paid (since many upside downers bought with 100% lender money) and focus on the fact that they have privileges vis a vis the property that renters do not. With some of the government programs that are in place, they might even be able to reduce their monthly payment. (The government is not sponsoring rent reductions, just loan modifications.)
In three to five years you'll be glad you refocused on the benefits of owning versus renting.
When I opened my Wall Street Journal this morning, it was filled with articles bemoaning the rate of recovery in the housing marketplace. It brought to mind a new way of looking at home ownership. (This may need to be "R" rated as it is a bit on the tongue-in-cheek side.)
Let's assume that the basic needs of human beings are food, clothing and shelter. Some of us rent, some of us buy a home and some are still seeking shelter wherever it can be found.
Renters make a payment to a landlord in exchange for the right to occupy a property owned by the landlord. The landlord has the right to impose some rules - no colored paint on the walls, no nails to hang pictures. no parking in the driveway, etc, etc. The landlord can raise the rent and not renew the rental agreement.
Homeowners make payments to a lender. They can paint the walls any color they wish. They can hang as many pictures as they wish. They can park on the driveway, They can tear out walls, put in new appliances or do whatever strikes their fancy. As long as the homeowners make the payments specified in the note and trust deed, the lender cannot evict them or increase their monthly payments.
The similarity between renters and homeowners is that both are required to make payments to someone else.
The difference is that the renter doesn't care whether the value of the house goes up or down. The homeowner does.
Perhaps homeowners whose loans are more than the present value of their homes could just look at themselves as renters with extra privileges. Then they can stop focusing on what they paid (since many upside downers bought with 100% lender money) and focus on the fact that they have privileges vis a vis the property that renters do not. With some of the government programs that are in place, they might even be able to reduce their monthly payment. (The government is not sponsoring rent reductions, just loan modifications.)
In three to five years you'll be glad you refocused on the benefits of owning versus renting.
posted by shirley harry at 9:08 AM
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