Nearly a full third of households are still renting...Are you one of them? How much is renting truly costing you? You are missing out on tax breaks, building equity, and all the other advantages of homeownership.

Over the last 90 days, the media has addressed several factors going on nationwide: rising foreclosure rates, declining equity, the collapse of sub-prime mortgages, etc.

Let me help you understand “THE WHY” behind these headlines. Most of those loans were made up of high risk borrowers that were put into the wrong financing programs, not counseled correctly and are now left without any option but foreclosure. What is the definition of a “high risk home buyers”? Marginal to serious derogatory credit, stated income loans where income was inflated to qualify and never verified, no ratio, no income/no asset loans, and Adjustable Rate Mortgages (ARMs) with high margins and index’s. Compounding all these problems, maximum financing of up to 100% was offered. This allowed people with no savings to purchase a home, who then had nothing to fall back on when their monthly mortgage costs increased.

Should there be a fear of taking on the responsibility of a mortgage? The simple answer is "no". Interest rates are still quite low, looking back over the last 20 years. If you are earning an income with good job stability, paying your bill’s on time, and even have the ability to show a small amount of savings…………you need to be a Homeowner! There are incredible First Time Homebuyer programs with outstanding interest rates still available in our industry. So don’t let the media put you in fear of buying Real Estate.

The key to a healthy housing market is the job market and it’s important to look at the geographical area you are living in. Real Estate in Nashville/Middle Tennessee is still a great investment and now there are better options, pricing and incentives available to buyers. It is important to note that housing trend are localized and if our job market continues to be strong, then housing prices will continue to perform well versus some other parts of the rest of the county. Even if the payment on a new home might be slightly higher than your current rent payment, it shouldn’t stop you from purchasing the home of their dreams. With the currently low levels of unemployment and the beefy gains in job creations, it looks like the housing market will remain vibrant in Nashville. Although it will be difficult to sustain the double-digit gains that much of Nashville has seen over the past couple years, you can expect a more moderate rate of appreciation, perhaps closer to the historical 5% range, which is still better than renting.

The talk of a housing decline has been going on for a few years now, and many of those who were unfortunately victimized by continuing to rent instead of purchasing a home are painfully mulling over their missed opportunity. But is it too late? Even with the more moderate levels of appreciation expected…procrastinating on that home purchase could still cost you long-term wealth through equity building.

Let's look at an example. If you are paying rent at $1,500 per month and your landlord increases your payment by a modest 5% each year, you would wind up paying just about $100,000 over a 5-year period! Worse yet, after forking over $100,000, you still would have nothing to show for it. With the extensive variety of programs still available to help buyers obtain a mortgage with even a modest down payment, the very same money wasted with renting for $1500 a month………….could have been used towards home ownership.

Mortgage payment versus rent payment by using a traditional 30-year fixed program: a mortgage of $200,000 could be obtained with a total monthly mortgage payment (including property taxes and insurance) ranging between $1530 to $1585. Assuming a 25% tax bracket, this mortgage payment would actually be less than your current rent payment of $1500 with your tax benefit.

So what are the 2 main benefits of home ownership besides the tax advantage? Because the mortgage is being paid down each month, equity is being built, therefore after 5-years, the $200,000 mortgage would be reduced to $180,000 roughly, adding $20,000 to your net worth without even considering appreciation. Factoring in appreciation adds an even bigger chunk to your wealth. If your home appreciates at a modest 5% per year, the value of a $200,000 home would increase to $250,000 after 5-years. Subtract the remaining mortgage of $180,000 and you have a whopping $70,000 of additional net worth! Even if the appreciation level were at 3.5% or half the historical norm, the result would still be $55,000 of additional net worth.

But if laying out the initial increase in monthly payment and having to wait for your tax benefit to show up next April is a tough nut to crack, the IRS wants to help. Instead of waiting to file for the tax benefits derived from your new home purchase, you can simply adjust the amount of your withholding with your employer. This allows you to have less tax withheld from each paycheck so you can handle the new mortgage payment more comfortably throughout the year. In essence, you are taking your tax refund as you go instead of letting Uncle Sam hold it all year, interest free.

Visit www.irs.gov and use the IRS withholding calculator. This very handy tool can quickly show you the effect a change in withholding will do to your net paycheck. Remember to balance this with the expected refund and it is always a good idea to check with your tax advisor.

Don't be victimized by the media hype. Buying a home is a big step, but it is almost always one in the right direction.