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If you missed the previous article in this series, I broke down the two common misconceptions about what it means to become a homebuyer/homeowner. One was that if you finance the sale with a mortgage loan that means you have made a real estate purchase which makes you the “homeowner”, which is not true at all. All you have done is assumed responsibility over a piece of private property in exchange for some individual rights to it, but have taken on personal financial liability in order to do so.
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Any banking institution that owns the lien on the real estate effectively controls the right of way to the piece of private property involved in the sale (so long as the debt remains unpaid). The other misconception is that your home is an investment, but that couldn’t be further from the truth. If only I had a nickel every time I heard some naïve individual use the most tired cliché in the game to explain why home buying is better than renting by saying “You’re just making someone else rich when you rent.” Or “When you buy you’re paying yourself by earning equity.” The industry pushes the myth of ownership because when pen meets the paper, the reality is that it’s good for business. Compare that to the reality of a so called homebuyer who believes that they own private property, and you’ll see a stark contrast in perception.
Big Responsibility & Little Authority
When you become a financed homebuyer, meaning you have a mortgage, you will be required to have home insurance. Now that doesn’t sound like such a bad thing, why wouldn’t you want coverage on your property? Well, it’s never a bad idea to have insurance however you will learn that just because it’s called private property does not mean it is your own personal sanctuary. Insurance companies will send representatives to inspect the real estate they are servicing. This is done under the guise of safety and security, but it is absolutely performed in the best interest of the insurance companies. The insurance rep will perform an inspection for the purpose of mitigating the company’s exposure to risk that it may be held liable to cover in the event of a claim. This can often lead to new homeowners (responsibility owners) being caught off guard and presented with a Honey-Do list of repairs and updates that will be required to maintain coverage. If you lose insurance coverage while carrying a mortgage, then that may put you in default of your loan and the lender may foreclose. These updates could include projects as small as replacing the steps to an entrance or removing an overhanging branch of a tree near the property – to completely updating a heating or electrical system (it’s uncommon to discover major anomalies after closing though). These repairs/updates can come as a surprise in the form of a quick couple hundred dollar bill all the way to a several thousand dollar time consuming project. SURPRISE MF!
I wish I could tell you that that is about as bad as it gets for the home buying homeowner, but unfortunately that would be a lie. Whether you need to or not, whenever a major renovation or project takes place on the real estate lot, you are required by law to receive a permit in order to make alterations or changes to “your” property. This is permission that may or may not be granted to you by the town/city in which you must pay for on top of any expenses involved in the actual project itself. And just when you thought, as a home buying homeowner, you were going to be free to do whatever you want now that you occupy “private property”, think again. If you get caught trying to bypass the powers that be when making updates to the real estate you can be penalized via costly fines. Sometime a town/city rep will visit the real estate for tax assessment purposes and that may result in questions about new looking structures or updates to the property. Also, if you are not properly maintaining the real estate (mowing the lawn, keeping a clean landscape, etc.) that can result in fines as well. The homeowner (bag-holder) goes BRRRRRR!
I wish I could tell you that that is about as bad as it gets for the home buying homeowner, but unfortunately that would be a lie. Whether you need to or not, whenever a major renovation or project takes place on the real estate lot, you are required by law to receive a permit in order to make alterations or changes to “your” property. This is permission that may or may not be granted to you by the town/city in which you must pay for on top of any expenses involved in the actual project itself. And just when you thought, as a home buying homeowner, you were going to be free to do whatever you want now that you occupy “private property”, think again. If you get caught trying to bypass the powers that be when making updates to the real estate you can be penalized via costly fines. Sometime a town/city rep will visit the real estate for tax assessment purposes and that may result in questions about new looking structures or updates to the property. Also, if you are not properly maintaining the real estate (mowing the lawn, keeping a clean landscape, etc.) that can result in fines as well. The homeowner (bag-holder) goes BRRRRRR!
