Monopoly and The Game of Life may seem like only childhood games. However, these games are more than just game boards and tokens. These games hold a valuable life lesson: The importance of owning property.
For the college student, buying a house may seem not only difficult, but virtually impossible. With the all-inclusive rentals that dominate the university area, it is easy to fall within the gimmick of apartment complexes. Nevertheless, there are other options available for college students. Buying a house is within the realm of possibility.
Certain precautions should be taken when considering such a large purchase. First and foremost, every potential house buyer should be an informed buyer. Information can be found on the Web concerning the basics of house buying. It is essential to be familiar with real estate jargon. Terms such as lien, mortgage and equity are not part of everyday dialogue. Dictionaries provide sufficient definitions, but clarification can be provided by any professional in the field if needed.
Being familiar with the mortgage process is also important. Simply put, a mortgage is a loan to buy property. Once prequalified and preapproved from a mortgage lender, a personal budget is in order. A budget helps college students manage their finances and concentrate on the amount of their prospective mortgage payments. Dan Burton, a USF student, has recently encountered the mortgage process.
“I have been around checking out mortgage lenders. It can be tough finding the right fit, but I have found that now is the time to invest in a house. The mortgage rates are relatively low and feasible for college students,” Burton said.
The option of utilizing a professional agent or realtor is available. Buying a house is certainly possible without professional help, however, agents do possess certain advantages. A vast majority of houses are listed with real estate agents.
A common myth associated with agents is that they work on commission. Agents do work on commission, though their commission is gained from the seller and not the buyer most of the time. Lois Buchanan, a real estate agent for 17 years, encourages college students to employ the help of an agent.
“Real estate is a profession. Would you consider going to court without an attorney? No. Real estate is an agent’s trade. True, you can do it yourself, but a realtor is the way to go,” Buchanan said.
Once an agent is found — or not, if that is the case — it is important to determine housing needs and wants. Location is obviously a crucial element to consider. Other significant elements would include the size of the house and a price that seems affordable and reasonable. It is important not to rush this process because unlike an apartment, it is impossible to simply terminate your lease. Leases are non-existent when it comes to owning a house. Resell is the only resolution for dissatisfaction.
Making an offer is the next step. When a house is found that meets the needs and wants of the buyer, an offer is made. If a real estate agent is employed, negotiations will occur through him/her. An offer, and sometimes a counter-offer by the seller, is made. If accepted, it is critical to splurge on a home inspection.
“I wouldn’t sell or buy a house without an inspection. A realtor or the buyer will not catch everything. An inspector will use a fine tooth comb to identify what repairs are required and necessary,” Buchanan said.
The items that are caught in the home inspection may or may not be negotiated into the contract at that time. The home inspection does assess an additional fee for the buyer, however.
The only phase left is known as the closing process. Florida law requires that the buyer obtain a title for the house for closing purposes. Closing on a house involves a fair amount of paperwork. The overall house purchasing process varies in time because each individual situation is different.
With the procedure of house buying said and done, some may ask “Why buy a house instead of renting — especially if one is a college student?” After all, with renting there is generally less work in maintaining an apartment. There is also the factor of more fixed costs for the term of the lease. On the other hand, renting does have its disadvantages. There is hardly any ability to personalize living space and there is no tax advantage to renting.
“When renting, a person is basically paying someone else’s mortgage. The last two condos I sold were sold to parents who bought for their college-going children. It is just a better investment,” Buchanan said.
While owning a house also has its cons, it is important to realize the pros. Over time, the mortgage value will decrease and the equity of property will increase. Most importantly for the college student, tax breaks can be involved with owning a house. Linda Litterall, vice president of operations at Premier Community Bank, has been working with house buyers for years.
“College students can receive all kinds of breaks when it comes to buying a house. Some institutions offer what is called a First Time Buyers Loan. There is also PNI — payment, taxes, and interest — which is offered in one bill that is often less than rent,” Litterall said.
Buying a house as a college student can be a smart investment. It requires careful thought and consideration, though. Some people may travel through the Monopoly board of life and never own a house, and some may. For those who dare, collect the $200 salary as you pass GO.
Information from the Home Buyer’s Information Center was used in this report.