1. Renting Vs. Buying a Home

2. Scenario A renter starts out paying $800 per month with annual increases of 5%. A homeowner purchases a home for $110,000 and pays a monthly mortgage of $1,000 With the tax savings of homeownership, the homeowner's payment is less than the rental payment after 3 years. After 6 years, the homeowner's payment is lower than the renter's monthly payment. Source: http://www.realtor.org/field-guides/field-guide-to-buying-vs-renting

3. You should buy a house if…  You have a secure job and income  You plan to live in the house more than a few years  You have enough money for a down payment  You can afford the monthly payment (not to exceed 35% of your gross income) Source: http://www.cbsnews.com/news/why-renters-should-consider-buying-a-home/

4. 4 Advantages of Buying a Home 1. Building Equity 1. Building Equity – as you pay down what you owe and the value of the property increases, you earn equity. Equity is the value of the house minus what you owe. Savings on Taxes 2. Savings on Taxes – On your taxes, you can deduct mortgage interest and property taxes. Improvements 3. Improvements – As a homeowner, you can paint, landscape, and improve your home to your liking. The American Dream 4. The American Dream – pride of ownership

5. 4 Disadvantages of Buying a Home 1.Maintenance 1.Maintenance – You pay for all repairs 2.Rising cost of 2.Rising cost of: Insurance and property tax 3.Selling 3.Selling – Having to sell if you move and paying for realtor fees and closing costs 4.Liability 4.Liability – If something happens on your property, you could be sued for damages

6. 4 Advantages of Renting 1. Maintenance 1. Maintenance – The owner of the home/apartment pays for maintenance. Predictable Costs 2. Predictable Costs – You will know the exact cost of rent for the period of your lease. Flexibility 3. Flexibility – At the end of your lease, you can move easily without having to sell your home. Temporary 4. Temporary – Over time, you can live in many different places without being tied down to a home.

7. Equity Example You buy a house for $250,000. You put $25,000 down and take out a loan for the remaining $225,000. You make payments for 10 years which reduces the amount you owe the bank. You now owe the bank $160,000 instead of $225,000. The value of your house has risen to $375,000 in those same 10 years. $375,000(the value of your house) -$160,000(what you still owe the bank) $215,000 (your equity)

8. What is equity good for? Now you are married and expecting a child. The house you bought 10 years ago is not large enough for your growing family. You can now sell your house for $375,000. The realtor’s fees and closing costs add up to $30,000. $375,000(the value of your house) $30,000(realtor’s fees and closing costs) -$160,000(what you still owe the bank) $185,000 (profit) larger house without raising your monthly mortgage payment You can take the profit from the sale of this house and use it as a down payment to purchase a larger house without raising your monthly mortgage payment!

9. Video Clip Running Time: 11:37 https://www.youtube.com/watch?v=JNL6f1xkie4

10. On Your Own