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Published byRudolf Harrison Modified over 7 years ago
BUYING VS RENTING
BUYING Homeowner Advantages Freedom of use Pride of ownership Greater Privacy Income tax benefits Opportunity to build credit Creation of equity Property for collateral Homeowner Disadvantages Less mobility Moving is time consuming Large down payment necessary Maintenance costs Less money for other expenses due to mortgage payments
RENTING Renting advantages Greater mobility Paying only a small security deposit rather than down payment No direct maintenance costs Good credit if rent is paid on time More money for other purchases Renting disadvantages No freedom of use No return on rental money Few or no tax benefits Less privacy Little responsibility for property No property for use as collateral
LENDER RULES FOR MORTGAGE 1. Purchase price / annual income = 2.0 or less 2. Mortgage payment / monthly take home income = 33.3 percent or less 3. Loan amount + appraised value of the house = 95 percent or less (often 80 % or less depending on lender) Annual Income Monthly Take-Home Pay Maximum Purchase Price Maximum Mortgage Payment $54,000$3,000$108,000$1,000 $75,000$4,500$150,000$1,500 $100,000$5,400$200,000$1,800
CLOSING COSTS Closing costs are fees involved in arranging for a mortgage or in transferring ownership of a property Include: Title search Legal costs Loan application Credit Report House inspection Taxes
RENTING Renters sign a lease, generally requiring a tenant to lease a property for a specified amount of time Generally one to three years Sometimes less time at an additional cost
RENTAL RESPONSIBILITIES Tenant Responsibilities Pay rent on time Pay Security Deposit Take reasonable care of the property Abide by rules set forth in lease agreement No pets Only individual listed on lease may live in property Landlord Responsibilities Ensure property has minimum services such as heat and water Obey building safety laws Make repairs within reasonable time
AUTO BUYING VS LEASING Factors to consider when buying a car Insurance costs Fuel mileage Older vs newer Maintenance and repairs Warranty Depreciation
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