Is it Cheaper to Rent, or Buy?

I have come to realize that many people believe, in the current real estate market in Reno, it is less expensive for their family to rent a home than buy one.  In fact, Freddie Mac recently conducted a study that revealed 82% of renters believe they are saving money by renting. While everyone’s circumstances are different, in the long run it is usually not less expensive to rent if you are in a position to purchase a home. †

Although it may seem less expensive to rent, if you are looking to contribute to your long term net worth, home ownership may be a valuable path for you to consider.  The typical wealth of the average homeowner in the US in 2018 was $231,420, a stark contrast to the $5200 average wealth of a renter.

So, while you may think it is less expensive to rent because you avoid major maintenance costs, taxes, and insurance, the truth is that your landlord has factored those costs into your monthly payment.

According to Bankrate, in cities with the highest populations of renters, home ownership would cost about the same as what they are already paying monthly for rent.  Assuming you have financed with a conventional fixed rate mortgage, owning a home gives you peace of mind that your monthly housing expenses will never increase, you will not be forced to move, and the money you are putting into your investment will stay yours and be returned to you when you decide to sell.  Utilizing first time home buyer assistance to get into a home and putting the same amount you are already paying for rent toward your mortgage, could have you well on your way to financial security.

On average, millennials today are spending a whopping 45% of their income on rent, with 25% spending at least half of their income on rent.  When you own real estate, you are able to grow your net worth by building equity in your home, instead of paying off someone else’s mortgage and maintenance expenses.

It is certainly true that home ownership is not right for everyone. For example, some require the flexibility of moving for their profession every few months.  In cases such as this, real estate may not be the best or most convenient investment.  

It is always wise to speak with financial professionals and loan consultants to get an accurate picture of your financial situation. If you need help sorting through the different options for home ownership, renting, buyer assistance programs, or finding professional financial resources, I am here to help.

Pros and Cons of the Reverse Mortgage

As our population ages and property values and the cost of living continue to rise, some homeowners have taken or may be thinking of taking advantage of a reverse mortgage option.  A reverse mortgage allows the homeowner to take a monthly draw from the equity they carry in their home, increasing their monthly cash flow but reducing the equity in their home.  At the end of the borrowers tenancy in the home, either at death or if they move into assisted living, the mortgage company sells the home to fulfill the remaining obligation of the mortgage.  The amount of the lien against the property, including any fees and interest that has accrued over the years, will be taken from the proceeds of the sale.  Any remaining value from the sale then goes to the previous homeowner, or their heirs.

The reverse mortgage was once considered a loan of last resort.  Intended for the elderly to extend their period of financial independence; helping them to afford the mounting costs of healthcare, or aide in supplementing their retirement savings. 

There are also ‘single purpose reverse mortgages’ offered by some state and local government agencies, which allow homeowners to draw against their property for instances of required home repairs, improvements, or property taxes.  According to the MetLife Mature Market Institute, 20% of reverse mortgage borrowers are between the ages of 62-64, and over half are under the age of 70.

While there are risks in taking out a reverse mortgage, under the right circumstances they can be a good, generally tax free source of income for older individuals.  Additionally, a homeowner will never owe more than your home is worth and the payments will not affect ones Medicare of social security benefits.  The AARP (formerly the American Association of Retired Persons) recommends to its members that if they are in their seventies and have a substantial nest egg, the reverse mortgage may be a consideration to bolster their income and free up their cash savings for other investments.

One caveat to the reverse mortgage is the requirement that the homeowner continue to pay any property taxes and insurance on the home.  Failure to meet this obligation due to financial or other reasons means the bank can foreclose on the property. 

According to the US Department of Housing and Urban Development (HUD,) approximately 8% of reverse mortgages end in default.  If a household is occupied by a married couple and only one spouse is on the loan and the spouse who is not on the loan ends up as the surviving spouse, the bank will still require immediate repayment upon the death or relocation of the borrower.  If the surviving spouse is unable to pay back the loan, the house will be sold out from under them.

If you or someone you know are unsure if a reverse mortgage is the right choice, it is always best to consult with several financial professionals before committing to any major financial obligation.  While I am not a loan consultant, if you need help finding the right person to talk to I would be happy to facilitate the help you or your loved one needs.  

Thoughts About Independence on Independence Day

One of the first documented celebrations of the 4th of July occurred in 1778 when George Washington issued double rations of rum to all of his soldiers to mark the anniversary of our nation’s independence from England.  It was not until 1870 that the 4th of July was declared a national holiday.  

As you get ready to enjoy a day of BBQ and fireworks with friends and family on this 4th of July holiday, I hope you make time to reflect on what your independence means to you. 

What opportunities of independence have you been afforded, and with what sacrifices from others has that independence come?

When I think of what independence means to me, I think of the day I first left home and the day soon after that I realized I could go to the grocery store and buy, then eat, a whole cake if I wanted to. While I quickly realized the latter was an angle of independence that I was not interested in pursuing, I will never forget my first apartment and how proud of it I was. I loved the autonomy I had as an adult and I took immense pride in caring for and enjoying my newly acquired home.

When I think about my home today, I have the same feelings of pride and autonomy, but what I appreciate the most about my home is the feeling of safety for my children and my self, and the assurance of knowing I have a comfortable and clean place to retreat to at the end of the day, no matter what adversity I had earlier faced.

For some, the autonomy of adulthood meant the opportunity to leave home and join the armed forces. This was the case for a young friend of mine, Lance Cpl. Kyle Crowley. Kyle left home to join the Marines and gave his life in Iraq fighting for our freedoms and safety.

While many in our armed forces did not have the fortune of making it home, some individuals made it home only to face debilitating mental and physical challenges. Many of these individuals face homelessness today as a result of these wounds.

On this 4th of July, I ask you to please, reflect on the freedoms and safety that you enjoy today, and don’t forget that this freedom and safety has not come free.  Have an enjoyable and safe 4th of July.

Current Housing Options for Homeless Veterans in Reno are Dwindling

While I am a huge proponent of all qualified home buyers taking the steps necessary to make home-ownership their reality, owning a house is not for everyone and not all buyers are qualified. 

The Housing and Urban Development Veterans Affairs Supportive Housing (HUD-VASH) program provides rental assistance for homeless Veterans by providing them with a Housing Choice Voucher (HCV,) which is the terminology used to indicate payment being made to the beneficiary’s landlord by HUD.  To qualify for an HCV, the Veteran must receive case management and clinical services, provided by the Department of Veterans Affairs (VA).  The VA provides these services for participating Veterans at VA Medical Centers and community-based outreach clinics.

What I like most about the HUD-VASH program is they are guided by the idea that housing comes first.

What that means is when a qualified Veteran presents as homeless at a shelter, to law enforcement, at the VA Medical Center or elsewhere, the first priority is getting the Veteran a home and a case worker to get them back on track to self-sufficiency.  It is believed that self sufficiency is more likely to happen when an individual has a stable home.

HUD-VASH vouchers in Washoe County are administered by the Reno Housing Authority Vouchers are awarded to the Reno Housing Authority based on geographic need and the Authority’s administrative performance.  The data used to determine the number of vouchers delegated to an area are: HUD’s point-in-time data submitted by Continuums of Care (CoCs), VA Medical Center data on the number of contacts with homeless Veterans, and performance data from the Reno Housing Authority and VA Medical Center.  After determining the number of homeless Veterans, the VA Central Office identifies VA facilities in the corresponding communities.  HUD then invites the Reno Housing Authority to apply for the vouchers.  

As of today’s writing, there is an allocation of 330 HUD-VASH vouchers for Washoe County, administrated by the Reno Housing Authority, and another 100 vouchers for areas outside of Washoe County, which are managed by Nevada Rural Housing authority. The problem faced by the RHA is a shortage of landlords who are willing to participate in the program for a myriad of reasons.  With rents rising in Washoe County it is hard for HUD to stay competitive with their voucher rates. This market change has led some participating landlords to drop the program in favor of potentially higher rental income.  Additionally, the homeless Veteran population can be a difficult clientele to manage.  Mental health challenges can lead to an unfavorable reaction from landlords, and physical health challenges make convenient access to public transportation and health care vitally important to this population. 

Many of the properties that would be ideal locations to house Veterans in the Reno area have been bought by developers, only to be torn down or boarded up and used as a tax write off for investors.

The need for participating landlords is why I have made it a personal priority to provide units for the HUD-VASH program.  I am of the opinion that everyone deserves a dignified, safe, and comfortable place to call home.  If you would like to know more about this program, or our efforts to support the program, get in touch via my Contact Page any time.

Today is National PTSD Awareness Day

Post-traumatic Stress Disorder, or PTSD, is a psychological reaction to traumatic events that can be experienced by anyone who has been exposed to a life-threatening, violent, or dangerous situation. Common sufferers include combat Veterans and First Responders, who respond to help victims of traumatic events.

According to the Veterans Administration, PTSD is the leading contributing factor to nearly 40,000 American Veterans being without a roof over their heads.

PTSD is also a major contributing factor in suicides and substance abuse. VA statistics indicate that PTSD impacts 11% to 20% of Iraq and Afghanistan War Veterans, approximately 12% of Gulf War Veterans, and 15% of Vietnam Veterans.  In recent years there has been an increase in the number of homeless women who suffer from service related PTSD, whom are often accompanied in homelessness by their children.

It was not until the Forgotten Warrior Project in the 1970s that effort was directed into the identification and treatment of these invisible wounds.  For decades, PTSD was referred to as “shell shock” or “battle fatigue” and was dismissed as general anxiety.  The data from the Forgotten Warrior Project was crucial to the ultimate adoption of PTSD into the American Psychiatric Association’s Diagnostic and Statistical Manual of Mental Disorders in 1980.

The growing acceptance and recognition of PTSD as a clinical diagnosis has led to many resources, including the VA’s Readjustment Counseling Service, for Veterans who suffer from PTSD and other service related mental health issues and traumas.

Additional resources for individuals suffering from service related traumas include:

The National Coalition for Homeless Veterans – a resource that provides emergency and supportive housing, food, health services, legal aid and case management support for homeless veterans

The National Alliance to End Homelessness – a non-partisan organization committed to preventing and ending homelessness which has an array of policy, data and program resources related to homelessness among veterans.

and The Disabled American Veteran’s Charitable Service Trust – an organization that promotes the development of supportive housing and necessary services to assist homeless Veterans to become productive, self-sufficient members of society.

If you encounter a homeless Veteran, or any other individual that you think may be affected by PTSD please, let them know that there is help, and guide them to the resources they may need.

For immediate help, call The National Suicide Prevention Lifeline: 1-800-273-8255

Veterans Crisis Line: 1-800-273-8255, press “1”

Don’t Let the Term ‘Rural’ Fool You When it Comes to Home Buyer Assistance

Alleviating the affordable housing problem in the greater Reno Metro area starts with getting qualified buyers into home ownership and out of high priced rentals.  Lowering the demand for rentals will drive prices down and make it easier for those with fewer monetary resources to find homes. In my last post, Down Payment Assistance May Be Right At Your Fingertips, I provided details of some of the programs offered by the Nevada Housing Division. Today I hope to dispel some confusion surrounding another program available to Nevadans, Home At Last™

The Nevada Rural Housing Authority (NRHA) offers a program, Home at Last™ Down Payment Assistance, that can help home buying hopefuls with up to $24,000 in down payment assistance.  

The Nevada Rural Housing Authority (NRHA) offers a program, Home at Last™ Down Payment Assistance, that can help home buying hopefuls with up to $24,000 in down payment assistance.  

The term “Rural” often leads people to believe they will not be able to take advantage of the assistance if they want to live in their preferred area, but you may be surprised to find out that an area of interest to you actually does qualify.  People are often surprised to find out that areas such as Sparks, Carson City, and Fernley qualify.  To check an address of interest for eligibility you can visit the NRHAs eligibility map here.

The down payment assistance offered by the NRHA is provided in the form of a 3-year second mortgage that is completely eliminated (forgiven) after living in the home as a primary residence for three years.  The secondary loan does not charge any interest and requires no payments.  Eligible loan types include FHA, VA, USDA Rural Development, and exclusive Conventional loans known as HFA Preferred and HFA Advantaged. The program does not have any purchase price limits, although a homebuyer may be limited by their loan type.

Another differentiating feature of the NRHAs loan assistance program is that the home being purchased does not have to be the only property you own.  What this means is as long as you are planning to live in the new home as your primary residence, you do not have to have already sold your previous residence to qualify.

An additional benefit to the Home At Last™ program is their Home At Last™ Pals Pet Adoption Program. 

At the completion of your loan process you will be given a certificate, good for 60 days to present to your local animal shelter. With this certificate the NRHA will cover the entire cost of your pet adoption fee.  For more information on the Home At Last™ Pals Program you can call the Pals hotline at (775) 283-0173 or visit their website here.

If you need help navigating the options for home ownership assistance, feel free to contact me any time.  Although I am not a Loan Consultant, I would be happy to refer you to a lender that will find a program that works for you.  

Down Payment Assistance May Be Right at Your Fingertips

As I mentioned last week, down payment assistance doesn’t just help new home buyers. There are down payment assistance programs available to help Teachers, Veterans, first time home buyers, and many other home buying hopefuls.  

Below are some highlights of the programs offered by the Nevada Housing Division, with links to the program websites for more information.

Home is Possible

Home Is Possible was established by the state of Nevada in 2014 to help home buyers get up to 5% of their home loan value to use towards a down payment or closing costs.  This can amount to thousands of dollars for a one time fee of $675.  Some of the other features of the program include attractive 30 year interest rates, an option for manufactured homes, no first time home buyer requirement, and forgiveness if you live in the home as your primary residence for at least three years.  To qualify for the program the borrower may not own another property at the time of closing, must earn less than $98,500 for government loans (FHA, USDA, VA), and be purchasing a home with a price below $484,350.  The applicant must meet standard underwriting requirements and have a credit score of at least 640.

Home is Possible for Teachers

The Home is Possible for Teachers program aims to aide those who have dedicated their careers to educating our youth.  There is no first time home buyer requirement for this statewide program, which provides a below market interest rate for 30 years and $7500 in bonus money that can be applied toward a down payment or closing costs.  The funds are forgivable after five years if the home has been lived in as a primary residence.  To qualify for the program the borrower may not own another property at the time of closing and must be a licensed full-time K-12 public school classroom teacher in Nevada, making below $98,500, with a minimum credit score of 660 or 640, depending on the type of loan being secured. The program is good for a home with a price below $484,350 that will serve as a primary residence.

With the Home is Possible for Heroes program, an honorably discharged veteran, member of the National Guard, surviving spouse or individual on active duty can qualify for a below market 30 year fixed VA or FHA mortgage anywhere in the state of Nevada.  There is no first time home buyer requirement, and the program is good for a home up to $484,350 with a qualifying income below $98,500.  The borrower must live in the property as their primary residence and may not own any other property at the time of closing.  Credit must meet standard underwriting requirements and the applicant must have a credit score of at least 640.

These are just some of the super amazing programs offered by the Nevada Housing Division.  Though I do not function as a financial services provider, as a real estate professional who wants to see every qualified home buyer realize their real estate dreams, I would be happy to help guide you toward a qualified loan consultant that can get you the assistance you may need.