Renting v. Buying
The choice between renting or buying is a tough one, both financially and emotionally.
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The Advantages Of Buying
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Considerations
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Net worth increases as you pay your mortgage down and your home appreciates in value
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Responsible for maintenance
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You pay less taxes to the government than if you are renting
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Responsible for taxes
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You can make your home the way you want it--add the colors you like, the carpeting you prefer, etc.
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Possibility of forecloser and loss of equity
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Instead of "making your landlord rich", you are contributing to your future.
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Less mobility than renting
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Sense of community, stability, and security
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Not dependent on landlord to maintain the property
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The Advantages Of Renting
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You can move basically anytime you want, within the parameters of your lease agreement.
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No tax benefits--you pay more money to the government
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You don't have to pay for improvements.
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No equity is built up
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You don't have to hire anyone to do the improvements.
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No control over rent increases
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Possibility of eviction
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Owning a home does build you equity, and also means you have to pay not just the mortgage each month, but real estate taxes, homeowner’s insurance, maintenance costs and any other incidentals that occur. From an emotional standpoint, it means you’ve agreed to establish roots in a single place with a long-term loan that for most people, lasts 30 years. Go into the purchase knowing what it’s going to cost you, both at the time of the purchase and in the long term. Get information from your local Realtor or Chamber of Commerce to determine how prices have risen in your area. A good realtor can even show you appreciation levels by neighborhood.
Don't know where or how to get started? There are programs to help you learn how. On the east side, Call Universal Home Lending. On the west side, check out this link: Southwest Housing Solutions
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This is an exerpt from an article I found from Suze Orman. She suggests the following:
Even if you take the time to calculate the true monthly cost of owning your first home, I would suggest that you put those numbers to a test. For you see, looking at the figures on paper and actually having to write those figures on a check are two different issues. So I want you to commit to the following exercise for six months before you actually start even looking for a home:
Step 1:
Figure out how much buying a home in your estimated price range will really cost you monthly, including all the expenses I pointed out above.
Step 2:
Subtract your current monthly rent from the total figure you came up with in Step 1. For example, if your current rent is $1000 and your monthly homeownership cost is $1,450, that is a difference of $450 per month.
Step 3:
Set up a new bank account. On the first day of each month - not the second, not the third, but the first day of each month - you are to deposit whatever the difference is between your current rent and what your projected homeownership costs would be; in our example, you would deposit $450 into the account.
Step 4:
You are to do this every month for six months. If you are late in your payments, or if you feel stressed out trying to make the payments, you should take this as a sign that you may not be financially ready to become a homeowner. Then take a little of this money and go out and celebrate. You deserve congratulations for going through this process and learning you aren't yet ready to buy. You just avoided making a huge financial mistake; and in my book avoiding mistakes is an important part of life.
To read the full article, click this link:
http://biz.yahoo.com/pfg/e10buyrent/