a Home ? 10.1 Housing Alternatives . Renting or Buying a Home ? 10.1 Housing Alternatives .

Renting or Owning a Home Advantages and Disadvantages of Renting Advantages and Disadvantages of Owning a Home Calculate the costs of home ownership Calculate the cost of renting a home or apartment Compare the costs of renting vs. owning

When considering whether to buy a home or rent a place to live a list of the advantages and disadvantages is one way to make an informed decision.

Buy or Rent? Advantages of Renting Disadvantages of Renting No Down Payment –You can earn interest on the money you would have used for a down payment. More Predictable housing Costs – No responsibility for repair and upkeep beyond normal cleaning. Mobility-You can move whenever you want to after giving the required notice No ownership-Your monthly payments do not give you ownership of anything. Rent Increases-Over time, you can expect the cost to rent the same place will increase. Restrictions-The property owner sets the rules for what you can do in and to your living space. No tax deduction – Rent payments are not deductible on federal income tax.

Buy or Rent? Advantages of Buying Disadvantages of Buy Ownership –Monthly payments lead to ownership Potential value- Some dwelling will increase in value over time. Tax deduction-Money paid in interest and property taxes can decrease your taxes. Fewer restrictions-Since you own the property, you can do what you want on your property within the law. Down payment and closing costs- You need money up front to obtain a mortgage. Property taxes-Taxes add to the cost of owning a home. Restricted mobility-You may have to sell the house to relocate, and there are no assurance that the value of your home when purchased. More responsibility-You must handle all maintenance and repairs.

Cost of Home Ownership Costs of Home Ownership The Hansen's want to buy a home in Broken Arrow, OK. Mortgage Interest first year $5,244 Annual property taxes $2,350 Annual home owners insurance policy $360 Home will depreciate $1,240 the first year Estimate Utilities for a year $1,270 Estimate Maintenance and repairs for a year $1,535 Lose $1,270 interest on their down payment. Estimate will save $1,428 in income tax What will be the net cost of owning the home in the first year for the Hansen's?

Costs of Property Rental Costs of Property Rental Mary Beth plans to rent an downtown Tulsa Apt. Monthly rent $710. Security deposit one months rent $710. Annual rental insurance policy $110. Estimate Utilities for a year $600. Annual Covered parking rate $240. What is Mary Beth’s first – years cost of renting the apt?

Cost of Property Rental Compare the cost of renting or home ownership Compare Renting and Owning Homes Cindy has $17,000 she can use as a down payment on a house that sells for $85,000. For the first year, is it less expensive for Cindy to buy or rent a home and what is the difference? Cost of Home Ownership Cost of Property Rental Mortgage Interest first year $5184. Annual property taxes $1,720 Home Owner Property Insurance $ 595 Estimate costs of ownership $3,270. Lose $680 interest on down payment. Estimate will save $895 in income tax What is Cindy’s cost of owning a home the first year Monthly rent $850. Security deposit one months rent $1200. Annual rental insurance policy $150. Estimate Utilities for a year $1,400. What is Cindy’s first – years cost of renting the apt?

Maintenance and Repairs $1,800 Student Module 10.1 Activity Compare Renting and Owning Homes Pat just received a big promotion at Williams Company in Tulsa, OK. She has been living with you Mother and Aunt. She is looking to buy a home or an apartment. For the first year, is it less expensive for Pat to buy or rent an apartment? Cost of Home Ownership Cost of Property Rental Mortgage Interest first year $6800. Annual property taxes $1,585 Home Owner Property Insurance $ 595 Estimate: Depreciation $1098 Maintenance and Repairs $1,800 Utilities $1,250 Lose $971. interest on down payment. Estimate will save $1,847 in income tax What is Pat’s cost of owning a home the first year Monthly rent $970. Security deposit one months rent $970. Annual rental insurance policy $150. Estimate Utilities for a year $1,050. What is Pat’s first – years cost of renting the apt?

Excel and word files 10.1 Costs of Home Ownership Costs of Property Rental Compare Renting and Owning Homes Excel Spreadsheet solution Student Module 10.1 Teacher’s Guide 10.1 Student Module – Activity 10.1 References