Renting Vs. The Bank Owning Your House Vs. You Owning Your House, What is the difference!

Renting Vs. The Bank Owning Your House Vs. You Owning Your House, What is the difference!

I held an open house this weekend and an interesting older gentleman shared a very interesting opinion with me regarding home ownership. He felt that because you borrowed money from the bank to purchase your home the house was not yours it was the banks.

Not wanting to make him angry for holding one to his beliefs I asked if he would consider what ownership truly meant for houses.

Renting:

• You can not change the home in anyway unless you have the owner's permission. (usually not the bank even if the home owner borrowed money)
• You are asked to leave the house even though you are making rental payments of the agreed upon amount. (usually to the home owner even if they borrowed money from the bank)
• When you leave the property you pack up and go you take nothing and leave nothing. (There is no equity that has been built up from the rental payments.)
• You did not take deduction from your taxes for the rent. (Check IRS tax codes.)
• There are more but you get the idea.

Bank owning your house because you borrowed money:

• You do as you please with in the law.(in good taste)
• You are asked to leave only if you don't make the payments. (which you agreed to make)
• You have equity and when you decide to sell you get some of it back and if the property appreciates you get more out than you put in.
• You get tax benefits

Owning your house (no loan)

• You do as you please with in the law.(in good taste)
• There are no payments except for property taxes
• You have equity and when you decide to sell you get some of it back and if the property appreciates you get more out than you put in.
• You get tax benefits only for the property taxes

It seems to me that the last two are quite similar and depending on the stage of life you are in it really makes no difference.

As a last note the conversation started because homes are so expensive now in the peninsula. He mentioned that homes in Millbrae were originally $ 30,000.00. I did not respond to that as the conversation was getting heated by this time and the other people at the open house were beginning to look nervous. I just want to remind everyone that in those days the average income per year was probably significantly less than $10,000.00 so it makes sense that houses costs have increased.

This was not meant to be a rant just to let those buyers know that I was being nice to an elderly gentleman and I didn't want him so angry that he has a medical condition at the house and to have the sellers yell at me for that.