"RENTER MENTALITY"

Why People Are Afraid of Home Buying

Even though a monthly mortgage payment may be lower than monthly rent for the same type of dwelling, many people don't even look into the possibility of home buying. It doesn't occur to them that, in the long run, it may be the most economical and most financially wise thing they will ever do in their life.

What Creates "Renter Mentality"?

Three big fears keep people stuck as long-term renters. They may not even be aware that they carry these fears!

1. Fear of the home buying process itself (the new and the unknown)
2. Fear of making a mistake.
3. Fear of making a commitment.

Many people let their fears rule. They stay in "renter mentality" and don't look into the benefits of home ownership until they've let thousands of dollars go "down the hole" to the rent-man.

1. FEAR OF THE PROCESS

Everyone is somewhat leery of anything new and unknown. To many renters, the world of real estate and finance is strange, intimidating and "too big" to get involved in. First time buyers often don't have a clue about the process, so it seems like a huge ordeal to even start thinking about it!

Many people don't want to admit they are afraid of:

• being "stupid"; not knowing anything; looking silly or inexperienced.

• fear of "professionals" in suits and ties

• fear of big downtown buildings (like banks)

• fear of being scrutinized and having "outsiders" look at their credit history, savings account, spending habits. People wrongly presume they will be "put down". . . that they will "feel small."

• fear that they won't understand the words and terms that realtors and lenders use. They've never heard most of this language before. They won't know how to respond. Fear of looking foolish is one of the biggest barriers to starting the home buying process! What people don't know is that every first-time buyer is in the same situation and that lenders and realtors are used to talking with and teaching "beginners." They want your business! They will treat you with patience and respect.

47% of all home buyers are first-time buyers like you!

2. FEAR OF MAKING A BIG MISTAKE

Many people just keep on paying the rent-man year after year because they know that they don't know enough about home buying to judge whether they are being "taken" or "screwed" by sellers, realtors, or lenders. They fear buying a "lemon" or paying too much for a house, or being cheated in some way.

What people don't know is that there are "checks and balances" in the system to prevents most outright fraud. This was not always so, and people should still "comparison shop" for the best interest rates and the best house for their money. First-time buyers should take the time to educate themselves and never feel "pushed" into a quick decision. The lender's appraisal will usually insure that you are paying a fair market price for the house. After all, they may be lending you 97% of the value of the house! It is in their best interest to make sure it's not over-priced.

The lender's appraisal, however, won't guarantee that the house is free of defects. To ease these fears, you should hire a reputable "outside" inspection firm to check out the structural and mechanical systems in the house. Some houses may come with a warranty provided by the seller, but you will pay a premium for it.

There are still home-loan scammers our there, but generally they operate on people who already own their home and are getting a second mortgage for improvements.

Generally you can rely on "the system" to determine that your new house is worth what you will pay for it and that you will be informed of its condition and the costs of needed repairs. But keep your eyes open, ask plenty of questions, kkeep notes, and pay attention to your gut feelings.

3. FEAR OF MAKING A COMMITMENT

It's natural to fear a 30- or even a 15-year loan. Being tied to a permanent payment or a permanent location feels weird to many young people. Anything could happen! "I could lose my job!" "We could get a divorce!" "I could get sick!" "The neighborhood could go down!" are common fears that may keep people from buying.

Yes, people need to weigh the benefits of ownership against the risks. The trouble is, most people are unaware of the benefits!

Also, people may stay in expensive rental situations because they fear that they can't take care of a house, that they don't know enough to maintain it, or that maintenance is terribly expensive.

Anybody can take care a house! It's not a big deal. If it was properly inspected when you bought it, you can prevent problems or plan for needed repairs and secure low-interest loans to do them. The most important thing is to take care of little problems right away. Don't let them go.

Another reason why people fear committing to a long-term mortgage is that their parents never bought a house, so they have no "experience" or background in owning. It doesn't feel "familiar." They can't "identify" with homewonership.

It's very important that people look at the possible reasons they don't look into buying. Many times the reasons are "sub-conscious," and people aren't even aware that their decisions are shaped by feelings rather than reality, by fears rather that rational fact.

To learn about the actual advantages of buying versus renting, read our handout: The Benefits of Home Ownership.