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