So many reasons, so little time.

Historic Low Interest Rates

The lowest interest rates are now at 5% and often times near 4.5-4.75%.  With much government backing, mortgage lenders are able to offer these low rates.  Remember, they may not stay here forever so it is always wise if you are in the market to lock in the best fixed rate so you don't lose out on the tremendous savings these Historic rates provide.  For example, if you borrowed a $150,000 mortgage at 7%, your monthly Principal/Interest payment would be $997.95.  If you qualified at today's 5.0% rate, your monthly Principal/Interest payment would be $805.23- a savings of nearly $2,400 per Year!

Roommate Contribution

It is normal for students to "rent" out 1, 2, or even 3 of the vacant bedrooms in a home.  This rent is normally $300-400 per bedroom.  So it is possible that two roommates contributing $350 per room will offset your total monthly mortgage payment by $700.  On a $80,000-90,000 mortgage, this "contribution" will possibly make your entire monthly mortgage payment!!  This is like paying for a house for FREE!

Buyers Market

There is no "National Housing Market" and although conditions in the rest of the country are difficult, Lubbock, TX is a different story.  The real estate market here is relatively healthy—meaning there is an adequate number of buyers and sellers keeping the balance of supply even.  That said, as of mid January 2009, there were approximately 1,200 homes for sale in the City of Lubbock.  This means many of these home owners are Motivated and Ready to sell to You!  It is a buyer's market which gives you some leverage when negotiating price.  

Annual Property Appreciation

Although the rest of the country is seeing property prices decline, Lubbock actually has seen a steady and healthy increase in home prices.  In fact, in 2008—despite the national housing crisis— Lubbock's average sales price per the Lubbock Association of Realtors increased by 4.7%!  For planning purposes, we would conservatively estimate an average increase of 2-4% per year.  Much of the price increase for your specific home is determined by how well it is maintained and how attractive you make it when it is ready for a re-sale. 

Mortgage Principle Reduction

Simply put, with every payment you make a portion of the payment goes toward interest expense and the other portion goes toward paying off the principal balance of the home.  For example, a $150,000 mortgage amortized over 30 years will have total principal paid of $2,115 over 12 months at 5.25% interest.  After 5 years of ownership, this will increase to Principal Paid just under $12,000.  That is money you no longer owe the mortgage company when the home is Re-Sold.  With the roommate contribution described above, much of this $12,000 is NOT paid by you or your student, but rather by the roommates who pay you!  Not a bad deal!!

Tax Savings

Using the same example above of a $150,000 mortgage amortized over 30 Years at 5.25%, you will pay Interest Expense for the first 12 months of $7,824.58 + Real Estate Taxes of approximately $3,000.   You can claim this entire $10,800 expense on your tax return by deducting it and receiving a savings equal to your Tax Bracket Rate.  So if your tax rate is 25%, you will have an estimated Tax Savings of over $2,500 just from this one home.   Remember, you are not paying ALL of this!   Your roommate contribution is assisting with much of this annual expense.   Again, not a bad deal to have!

Why is this not for everyone?

As many advantages and benefits exist, purchasing a home for you or your student is NOT always the best option for the following reasons:  

Length of Ownership - If you only plan on owning the home for less than 2 years, the expense of purchasing and the expense of selling doesn’t necessarily outweigh the savings of renting.  

Ease of Transition -  It is much easier to get up and leave a rented apartment or leased home than it is to sell and leave an owned home. 

Maintenance - There will always be some maintenance for both rented or owned property, but the home owner carries the ultimate responsibility for upkeep, fixes, repairs etc.. As a homeowner, ask me about Home Warranty Policies (American Home Shield ex.) to offset most of the cost and hassle for maintaining your electrical, plumbing, Heat, AC, appliances etc… This is a great way reduce your overall risk.

Cost - There is a greater cost for purchasing a home than renting or leasing.   I would budget for a minimum upfront cost of 3.5% of the sales price.  For example on a $100,000 sales price, if you can come up with $3,500-4,000 for the down payment or closing costs, this will often times be all that the mortgage companies require to get into the home.  If you do not have this much cash available, then purchasing a home may not be the greatest option for you.

What Others Are Saying -

http://www.frontdoor.com/news/article/2078

http://www.frontdoor.com/news/article/546

Additional Questions??

Please do not hesitate to call one of us directly for your specific questions.  We are here to help give you all the right information so you can make a Wise and Informed Decision as to whether or not buying a home is right for you.