Presentation is loading. Please wait.

Presentation is loading. Please wait.

Renting vs. Owning The Difference Between Renting and Owning a Home.

Similar presentations


Presentation on theme: "Renting vs. Owning The Difference Between Renting and Owning a Home."— Presentation transcript:

1 Renting vs. Owning The Difference Between Renting and Owning a Home

2 1.9.3.G1 © Family Economics & Financial Education – Revised April 2005 – Housing Unit – Renting vs. Owning a Home Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Renting vs. Owning Lesson Objectives: – Determine the factors involved in renting – Determine the factors involved with home ownership – Evaluate the advantages and disadvantages of renting and owning a home – Compare the monthly expenses of renting and owning a home – Identify reasons which influence the decision to rent or own a home

3 1.9.3.G1 © Family Economics & Financial Education – Revised April 2005 – Housing Unit – Renting vs. Owning a Home Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Outline Introduction Reasons for making a housing choice Comparison of Expenses Renting – Advantages and disadvantages Owning – Advantages and disadvantages

4 1.9.3.G1 © Family Economics & Financial Education – Revised April 2005 – Housing Unit – Renting vs. Owning a Home Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Introduction Housing is the largest personal expenditure – About 1/3 of a person’s income Choosing where to live is based upon a person’s goals, values, needs, and wants Places to live include: – House, apartment, condo, mobile home, etc.

5 1.9.3.G1 © Family Economics & Financial Education – Revised April 2005 – Housing Unit – Renting vs. Owning a Home Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Reasons for Making a Housing Choice Personal and financial goals Personal values, needs, and wants Amount of money available for housing costs Financial resources and readiness Credit history Real estate prices Location preference Expected length of stay in particular place

6 1.9.3.G1 © Family Economics & Financial Education – Revised April 2005 – Housing Unit – Renting vs. Owning a Home Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Costs of Renting Monthly rent Security deposit Utilities – electricity, water, garbage, etc. Renter’s insurance

7 1.9.3.G1 © Family Economics & Financial Education – Revised April 2005 – Housing Unit – Renting vs. Owning a Home Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Costs of Ownership Monthly mortgage payments Down payment (one time cost) Closing costs (one time cost) Utilities – electricity, water, garbage, etc. Homeowner’s insurance Real estate property taxes Maintenance

8 1.9.3.G1 © Family Economics & Financial Education – Revised April 2005 – Housing Unit – Renting vs. Owning a Home Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Renting Rent – The cost of using someone else’s property Tenant (renter) – The person who rents the property Renters are generally – People who choose not to own a home – People who cannot afford to own a home

9 1.9.3.G1 © Family Economics & Financial Education – Revised April 2005 – Housing Unit – Renting vs. Owning a Home Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Renting continued Landlord – Owner of the rental property – May perform management duties or hire a property manager Property manager - may charge a fee to the landlord to perform the management tasks Duties – May collect rent and deposits, pay utility bills, complete repairs and maintenance, watch over the property, respond to tenant complaints, assign new tenants, etc.

10 1.9.3.G1 © Family Economics & Financial Education – Revised April 2005 – Housing Unit – Renting vs. Owning a Home Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Moving into a Rental Upon moving into a new place, people are usually required to pay a security deposit and sign a lease Security deposit – An advance payment to cover anything beyond normal wear and tear on the unit Lease – A legal contract between the tenant and the landlord, specifying the responsibilities and rights of both parties – Identifies the rent amount, security deposit amount and specifications, payment for utility bills, late payment penalties, length of lease, eviction terms, etc.

11 1.9.3.G1 © Family Economics & Financial Education – Revised April 2005 – Housing Unit – Renting vs. Owning a Home Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Advantages of Renting Low move-in costs Fixed monthly expenses Easy to move Location choices (may be close to work or school) Less maintenance and repair work Fewer responsibilities May offer extra amenities such as a tennis court or pool Less expensive than home ownership May be able to save for other wants or needs if renting a less expensive apartment Other expenses may be included in rent payment such as electricity, water, sewer, and/or garbage

12 1.9.3.G1 © Family Economics & Financial Education – Revised April 2005 – Housing Unit – Renting vs. Owning a Home Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Disadvantages of Renting Subject to terms of a lease Rent may change with little notice Less privacy and transient neighbors Restrictions on noise level, pets, etc. Fewer opportunities to upgrade apartment such as new carpet, paint, or wallpaper When leaving a property, no equity is returned as it would be if selling a home No tax deductions May lose rental if the property is sold

13 1.9.3.G1 © Family Economics & Financial Education – Revised April 2005 – Housing Unit – Renting vs. Owning a Home Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Home Ownership Home ownership - the buyer has purchased a housing unit as property – Goal of many Americans – A large financial decision Owning a home is an investment because if a person sells a home for more than what it was bought for, the person makes money. This is called equity. Financial planning and savings can assist a person in planning for the benefits of home ownership later in life

14 1.9.3.G1 © Family Economics & Financial Education – Revised April 2005 – Housing Unit – Renting vs. Owning a Home Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Purchasing a Home 90% of buyers take out a mortgage – A home loan in which the real estate is the collateral – Collateral is an item promised to the lender if the borrower does not pay back the loan, usually the home Down payment – Amount of money paid on the home at time of purchase – Typically 10 – 20% of the purchase price of the home Recommended purchase price amount an individual should pay for a home – 2 ½ times their annual household income

15 1.9.3.G1 © Family Economics & Financial Education – Revised April 2005 – Housing Unit – Renting vs. Owning a Home Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Advantages of Ownership Build equity which can be borrowed against if necessary Pride of ownership Feel more comfortable and have more privacy Stable mortgage payments More room and storage Improvement of buyer’s credit rating Income tax deductions for property taxes and mortgage interest Potential for property to increase in value Free to make home improvements and have pets (items typically not allowed in rentals)

16 1.9.3.G1 © Family Economics & Financial Education – Revised April 2005 – Housing Unit – Renting vs. Owning a Home Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Disadvantages of Ownership Large down payment Move-in costs Insurance costs Possible for property to decrease in value Time, money, and energy commitment Repair and maintenance costs Property taxes can raise substantially Money is tied up in the home May take several months to sell a home if trying to relocate

17 1.9.3.G1 © Family Economics & Financial Education – Revised April 2005 – Housing Unit – Renting vs. Owning a Home Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Keep In Mind... People are always paying for a home. It’s just a matter of whether it is for themselves or their landlord.

18 1.9.3.G1 © Family Economics & Financial Education – Revised April 2005 – Housing Unit – Renting vs. Owning a Home Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Renting vs. Owning Lesson Objectives – Review – Determine the factors involved in renting – Determine the factors involved with home ownership – Evaluate the advantages and disadvantages of renting and owning a home – Compare the monthly expenses of renting and owning a home – Identify reasons which influence the decision to rent or own a home

19 1.9.3.G1 © Family Economics & Financial Education – Revised April 2005 – Housing Unit – Renting vs. Owning a Home Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Renting vs. Owning Assignments: – Renting vs. Owning a Home worksheet A1 (homework) – Housing Comparison worksheet A2 (homework)


Download ppt "Renting vs. Owning The Difference Between Renting and Owning a Home."

Similar presentations


Ads by Google