Avoiding the "American Dream" Trap

Owning real estate—as opposed to leasing or renting it—is commonly equated with achieving the American dream. We take for granted that owning a home is superior to renting one, especially if you have a family. Indeed, politicians and community activists are wringing their hands over the prospect of the American dream being lost for the millions of homeowners who face foreclosure.

To a large extent, we have been sold on this idea by industries that stand to benefit from a robust housing market and governments that depend on property taxes. There are, however, many more important aspects to the American dream than owning a house. Democracy, freedom, public education, and equal economic opportunity come to mind.

Your House Is Not Your Home

You will likely have an easier time dealing with foreclosure if you understand (and remind yourself regularly) that your house and your home are not necessarily the same thing. A home is where you and your loved ones live. It’s about your neighbors, your memories, and shelter from the storm. Your home is where you sit down to a family meal, entertain friends, and get in touch with your creative side by arranging furniture, hanging art and family portraits, or changing the wallpaper. A home is where you can relax after work or return after a trip.

In essence, home is a concept you can take with you whether you buy another house or end up renting. Sure, you would probably rather stay where you are, but the fact that you may have to move should be seen for what it is: a temporary interruption in your life from which you are certain to recover. In fact, finding a new place to live can lead you to new opportunities, new friends and neighbors, new community activities, and a different perspective on life.

You Are Not Your House

In the same way your house is not your home, you are not your house. It’s deeply ingrained in our culture that the size and location of the house we live in indicate our value as human beings. For example, given the opportunity, most of us would prefer to live in a large house with a stunning view. It’s not because we need a large house—average household sizes have gone down just as average house sizes have gone up. But for most of us, a large fancy house provides the status and self-esteem we crave.

Home Ownership Is Overrated

The benefits of home ownership are vastly overrated. As you may remember from your days as a tenant, renting has definite advantages. It offers freedom from the economic burdens and stress every homeowner feels when faced with the need to pay for rodent control, a new paint job, a new roof or furnace, an expensive city assessment for road improvements, increasing property tax, broken water pipes, and a variety of other problems that homeowners are naturally heir to.

If you need to relocate, get away from neighbors, or travel over long periods of time, renting gives you flexibility that you lack with home ownership. And if you want to stay put, a long-term lease is a good hedge against having to move before you are ready.

If you’re putting an inordinate amount of money into your mortgage, you quite likely are making sacrifices in other important areas of your life, such as your family’s health, your children’s education, charitable contributions, or visits to far-flung relatives, to name but a few common expenses. Living in poverty-like conditions just to remain in your house doesn’t make a whole lot of sense, especially if your house is worth a lot less than what you owe on it. You should think twice about holding on by your fingertips to a house that is not likely to appreciate in value any time soon and which is unlikely to ever produce much equity.

Excerpted from The Foreclosure Survival Guide, by Stephen Elias (Nolo).

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