Should I Rent or Should I Buy?

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Renting an apartment or a house works well for young people fresh out of college, just beginning to establish them-selves in life. But there are many disadvantages of renting-and we won't even count the fact that you're throwing your money away! If you've been out in the work force for a while, it's time to take a look at buying.

Transcript of Should I Rent or Should I Buy?

  • Should I Rent Should I Rent Should I Rent

    ororor Should I Buy?Should I Buy?Should I Buy?

  • Disadvantages Disadvantages Disadvantages

    of of of

    RentingRentingRenting

    Renting an apartment or a

    house works well for young

    people fresh out of college, just

    beginning to establish them-

    selves in life. But there are many

    disadvantages of renting-and we

    won't even count the fact that

    you're throwing your money

    away! If you've been out in the

    work force for a while, it's time to

    take a look at buying.

  • People who rent have no tax

    advantages. When you buy a

    home, there are many tax credits

    for which you become eligible.

    They include a deduction for

    your mortgage interest, the sales

    tax when you buy or improve

    your home, and energy credits.

    The property taxes you pay to

    your state and local municipali-

    ties are also deductible. These

  • days, the government has

    created stimulus credits that put

    money in first-time homeowners'

    pockets. If you're still renting,

    you're not taking advantage of

    any of these.

    People who rent never know

    when the rent will change. Well,

    actually you do know: You can

    count on it going up every time

  • your lease renews. With these

    tough economic times, there are

    few landlords who can resist cost

    -of-living increases in rents they

    charge. If you own a home, as

    long as you choose a fixed-rate

    mortgage, your payments will

    remain pretty stable. They might

    fluctuate a tiny bit from year to

    year if tax levies are passed or if

    your homeowner's insurance

  • goes up. But basically, you're

    looking at a stable amount.

    People who rent never have

    control over changes in their

    homes. What if you want to paint

    the kitchen in a bright, kicky

    color scheme, but the landlord

    says stick to white? What if you

    know you could really improve

    the logistics of the place by

  • knocking out a wall, or widening

    a doorway between two rooms?

    Again, you have no real say over

    it. Some landlords have been

    known to fuss over too many

    pictures being hung on the walls.

    The truth is, if you're paying to

    live there, you should feel that

    you can stamp it with your own

    personality.

  • People who rent never build

    up any equity. This goes beyond

    the fact that you will just end up

    with a drawer full of payment

    coupons while your landlord

    reaps all the tax advantages

    of ownership. This also includes

    any efforts you put into

    increasing the livability or value

    of the place. What if you really

    want a garbage disposal in the

  • kitchen sink? What if you buy

    some rose bushes to plant in the

    yard? Maybe the landlord will

    approve, but you know you won't

    be taking it with you when you

    leave.

    People who rent cannot make

    decisions about how they live.

    There are too many rules! No

    pets. No overnight guests. Your

  • kids must be quiet. No pool. Only

    one car, park it in the driveway,

    and guess what-you never get to

    use the garage. And you can be

    assured that however you do live

    will be discussed by your land-

    lord with every neighbor he

    knows on the street.

    The truth is that none of these

    reasons bothers young people

  • people who are just leaving the

    nest. They couldn't care less

    about equity or home improve-

    ments or tax advantages. What

    does it mean if you are becoming

    concerned with these issues? It

    means you have reached a level

    of maturity and commitment, or

    a level of financial security, so

    that you are ready to take the

    step toward home ownership.

  • Five Advantages Five Advantages Five Advantages

    of Owning Your of Owning Your of Owning Your

    Own HomeOwn HomeOwn Home

    It's time to buy your own

    home. Your family and friends

    are advising it, and you have an

    unsettled feeling that your rental

    place just does not satisfy. There

    are many advantages to owning

    your own home, and here are five

    of them.

    You will own a place that ap-

    preciates in value. Yes, it's true,

  • despite the recent real estate

    market problems. Remember

    that scene in the movie, Gone

    With the Wind, when Scarlett

    holds up a fistful of earth and

    vows that she and her kin will

    never go hungry again? Even

    though we've gone through a

    recent downward spiral of home

    values, in general real estate

    holds its own very well. If you

  • buy a place now, your payments

    will result in a chunk of equity in

    future years that you can use

    for many purposes.

    People who own homes are

    eligible for a variety of tax deduc-

    tions. First, the year that you

    buy your home you can deduct

    the sales tax on the home plus

    the tax on any points you paid at

  • closing. You'll also find that

    energy-efficient home improve-

    ments are often tax deductible.

    The taxes you pay to your local

    municipality and state are tax

    deductible. Plus, every year

    you'll get a statement from your

    lender showing what part of

    payments went toward interest

    and what part went toward the

    principal. The interest payments

  • are tax deductible.

    It's possible to borrow on that

    equity we talked about in order

    to consolidate loans or pay off

    big expenditures. In the past,

    people could add up the interest

    from all their charge card

    purchases throughout the year

    and deduct it at tax time. That

    stopped in the mid-1980s. But if

  • consolidate some high-interest

    loans and pay them off with a

    home equity loan, the interest

    on the home equity loan is tax

    deductible.

    If you decide to purchase a

    home, it's a sign of status within

    your community. While there are

    many fine people who rent,

    there's nothing like the feeling of

  • owning a parcel of land in the

    place where you live. It gives you,

    your spouse, and your children a

    feeling of ties to the community.

    If you want to establish a flower

    or vegetable garden, you are free

    to do so. You might discover a

    motivation to become involved in

    community activities, especially

    since you've chosen a township

    that you like and enjoy. And if

  • you do get involved, people will

    respect your opinion.

    Besides the feeling of stabili-

    zation within your community,

    you gain financial stabilization.

    When you rent, you are subject

    to rent increases per your land-

    lord's whim. When you buy a

    home, you achieve a stable

    monthly payment as long as you

  • finance with a fixed-rate mort-

    gage. But there's more to it

    than that. Your credit score will

    go up. It's true that the first year

    it might dip a little, because

    you've just taken on a huge

    responsibility. But as you finish

    your first year of on-time pay-

    ments your credit score will most

    likely go up. This will give you

    better interest rates when you

  • apply for a car or other major

    loan. Even your insurance rates

    will be lower because they are

    based in part on a good credit

    score.

    Welcome to the club!

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