The Actors Fund Money Moments - The Great Home Debate
Popular wisdom says that you should purchase a home. Have you ever been to a party of homeowners and told someone you rent? It’s not uncommon to hear people mumble that you’re “throwing money away” and not “building equity” through mortgage payments.
The issue of buy vs. rent can be especially difficult for people in the arts. Advice aimed at a general audience isn’t always right for someone who is self-employed, may work for many different companies in a year, and often has more than one job at a time.
There are certainly some positives to home ownership:
- Homes build equity. It’s true that in every mortgage payment a portion purchases your home from the bank. As you pay down your mortgage, your “ownership” or equity increases so that when you sell the property you can capture this money and use it for other goals.
- You gain tax advantages. If a homeowner itemizes their deductions for tax purposes—and most do—both mortgage interest and property taxes are deductible.
But, here are a few reasons you may want to think twice before buying:
- Renters don’t have to fix most home problems. Repairing the dishwasher and air conditioner fall to the landlord. When the cost of upkeep on a home is added to the cost of a house, renting starts to look more attractive. Throw in the fact that a renter doesn’t have to pay property taxes or homeowners insurance, and the scales begin to weigh more heavily still toward renting.
- Creative individuals are often on-the-go. What happens if you are asked to direct a film in Europe? Or you book a series role in a new city? Who is going to take care of your home? Renters can turn back in the keys while a homeowner tries to sell property or find someone to care for it while he or she is gone.
- Major fluctuations in income can cause extreme stress once you’re locked into a mortgage. As an entertainment professional, your income may not have the same “permanence” experienced by those in other industries. Buying a home without a significant emergency fund, could leave you stuck during a lengthy period of unemployment.
The point isn’t to avoid purchasing a house. Maybe a new house matches your lifestyle goals and needs. Owning a home can be a rewarding experience if you enter into it with your eyes wide open.
When you decide to purchase a home, remember these tips:
- If your work forces you to travel often or is in other ways unstable, purchase a home below your means. Lower cost homes sell more quickly in poor economic conditions, allowing you to move on without worrying about a house many miles away.
- Families hoping to purchase a home flood the market with buyers in the summer months. As they settle into the school year, prices drop in the late fall through January and February in most communities. To find a good deal, avoid shopping when houses are selling quickly because of increased competition.
- Pay for an inspection before you buy! People trying to save a few dollars will often skip hiring a professional inspector who gives you a written statement of a home’s potential problems, figuring they can probably see everything that’s wrong themselves. Always hire an inspector. They’ll find problems you wouldn’t have dreamt of.
Purchasing a home is one of the most expensive transactions most people ever encounter. By making sure it’s a decision that is right for you, homeownership will fit into your goals rather than hurting your aspirations.
The Actors Fund offers a complete financial wellness program, free for everyone in performing arts and entertainment. We invite you to learn more and participate in our series of seminars and workshops, designed to support you in the implementation of a personalized financial plan of action. Learn more about our Financial Wellness Program.