1. The Buying Issue
The Buying Issue

2. Principles Discussed Protection Under Federal Law Renting a Home
Advantages
Disadvantages
Buying a Home
Which Choice is Right for You?
The Buying Issue

3. Protection Under Federal Law
The Fair Housing Act
The Equal Credit Opportunity Act
The Fair Housing Act and the Equal Credit Opportunity Act were created to protect the rights of homebuyers, renters, and landlords, as well as to provide equal opportunity for home purchasing/renting and mortgage lending. Prohibited practices outlined by these laws will be listed in this module along with resources for obtaining additional information and reporting any violation of these laws.
Certain rights and responsibilities deal specifically with the landlord/tenant relationship. These are usually outlined in a rental agreement, commonly referred to as a lease. The lease will provide detailed information about what is expected from each party. It is signed by renter and landlord and is a binding contract. Though many of the rights and responsibilities may be the same in different locations, landlord/tenant laws vary from state to state and should be researched based on your location.
The Buying Issue

4. Renting a Home
The Buying Issue

5. Advantages of Renting a Home
Minimal maintenance costs
Flexibility to move without having to find another renter
Ability to establish your credit rating
Does not lose equity
When it comes to renting your home, some of the advantages include:
Minimal maintenance costs
All a renter has to do is pay rent and move in. Repairs, maintenance, yard work, taxes, and, on occasion, certain utilities are usually the responsibility of the landlord rather than the renter.
Ability to relocate
If a renter chooses to move, there are few strings attached; the remainder of the lease may be negotiated with the landlord. There is no burden of finding a buyer. If your career and or life choices cause you to move frequently, renting may a better choice.
Renter builds a credit rating
By paying rent and utility bills on time, a renter builds a positive credit history.
No lost equity
Since the renter does not own the home, the property value does not affect the renter financially.
The Buying Issue

6. Disadvantages of Renting a Home
Have to make monthly payments, based on the price set by the owner of the property
Earn no equity
Do not receive tax advantages
Limited on making improvements or changes to the property
Monthly payments
Rent is determined by the landlord and so it’s up to their discretion on changes to the amount of rent due.
No equity
A renter will never establish or benefit from any equity or ownership position.
No tax advantages
A renter cannot claim tax deductions for rental payments.
Limitations
Renters are limited in terms of making improvements or changes to the property.
The Buying Issue

7. Buying a Home
The Buying Issue

8. Advantages of Buying a Home
You have an investment
You build equity
You receive tax advantages
You may make property improvements and changes subject to building codes
Investment (building equity)
After 10 years of paying rent, a renter has little to show for it. After 10 years of mortgage payments, a homeowner has invested in property with strong potential for the home’s value to increase and for increased equity in the home.
Tax advantages
Certain items, such as interest on mortgage payments, can be deducted from a homeowner’s taxable income.
Flexibility
A homeowner can make design and structural improvements, subject to local building and housing codes.
The Buying Issue

9. Disadvantages of Buying a Home
Your equity and investment will to fluctuate
You are responsible for property taxes, maintenance, insurance, etc.
You have little flexibility in moving until you find a buyer for your home
Equity/investment
They are subject to fluctuation based on market conditions Sometimes neighborhoods decrease in popularity and value can decline.
Maintenance Costs
All maintenance, repairs, upgrades, taxes, and insurance are the homeowner’s responsibility
Difficulty relocating
If a homeowner needs to relocate on short notice, moving may be delayed until a buyer is found for the home.
The Buying Issue

10. Which Choice is Right for YOU?
The Buying Issue

11. Determine Your Options
Some things for consideration is to determine:
Your dwelling needs, not wants
Your lifestyle; based on reality and practicality
What you can reasonably afford
All the costs associated with your choice
Once the decision to purchase a home is made, you should calculate the cost of home ownership and the impact it makes on your budget.
Your first step is to determine your needs. If you only consider your wants, you might be passing up a great opportunity for a house that meets your needs.
Look at your lifestyle and determine what’s realistic based on your income and expenses that will incur. What has to change about your lifestyle to be able to afford this new home?
Consider all your costs and look for a place that you can reasonably afford.
The Buying Issue

12. Things to Consider Down Payment Income Mortgage Rate
Homeowner’s Insurance
Loan Period
Utilities
Property Tax
There are other things to consider when buying a home, besides the initial down payment and mortgage payments.
Your current and projected income
The down payment for the home
Your mortgage rate
The length of the loan
The taxes on the property determined by your local government
The utilities
Homeowners’ insurance
The Buying Issue

13. Which Option is Best… for You?
To rent a home or to buy a home depends on:
Your lifestyle
Your preparation
Your finances
Your goals
The decision to purchase a home is not an easy choice to make, but through preparation, research, and planning, the transition from renter to owner can be carried out smoothly. Be sure to analyze your desire to purchase a home, so you can be certain that home ownership is right for you. Review your finances, income, expenses, and debts to confirm you have the means to accommodate a mortgage and the other costs of owning a home.
The Buying Issue

14. Questions
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The Buying Issue