I don't get no respect.
I told
my landlord I want to live in a more expensive apartment.
He raised the rent. --
Rodney Dangerfield
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Should
you buy a home?
Renting vs. Buying:
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Steps to buying a home
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What is a
Mortgage and do you needed?
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Different types of Mortgages
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More Mortgage
Choices
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0 to 5% down
with FHA and VA loans?
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Cosigning: The Pitfalls
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Qualifying for a
Mortgage
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How much of a
mortgage and a house can you afford?
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Finding a home with FSBOs & Real Estate Agents.
- It's closing
time: Title and the keys please!
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Tapping your home
equity: Refinancing
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Tapping your home equity: Home Equity Loans
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Frequently
Asked Questions (FAQs) on Real Estate & Mortgages
Real Estate:
Renting vs. Buying
The common wisdom is that
making a monthly rent payment, as opposed to making a monthly mortgage payment,
is a bad idea, and is the equivalent of "throwing money away". However, that is
not necessarily always the case, nor is it completely true in all circumstances.
While there are some advantages to buying and becoming a homeowner as soon as
possible, there are also numerous advantages to renting, which ultimately make
it smarter to rent than to buy.
Advantages of Renting:
- You can usually rent an apartment or house
for much less than the monthly cost of buying it. In renting you initially
normally have to come up with only the first and last month's rents. You don't
have to come up with the thousands of dollars in up-front fees or closing
costs, such as inspections, legal fees, land transfer taxes, insurance, etc.,
as do home buyers.
- Renting provides an enormous amount of flexibility,
enabling you to decide on a year-by-year basis whether to renew your housing
situation, so when you need or want to leave, you can do so. Moving from a
house involves enormous planning and costs, such as the thousands of dollars
paid in commission to real estate brokers. There is no waiting to sell, and no
agonizing about the housing market at the moment you need to sell. You can't
place a price tag on the freedom and mobility available to you to pick up and
leave when the need arises.
- You aren't responsible for repairs and maintenance. Home improvements and upgrades, maintenance repairs,
gardening/landscaping, property taxes, etc., can become very expensive.
- You don't risk losing money if housing prices fall when
you're ready to sell.
- For a homeowner the stakes are enormously high should their
finances crumble. When a homeowner can't pay, the lender can take
the house through process called foreclosure. You'll lose all the equity invested in it, not to mention all the hopes and
memories.
Advantages of buying a home:
- Pride of ownership. You are most likely to feel good owning
a home than renting it.
- You accumulate equity because part of your monthly payment
goes toward paying down the mortgage., which you may be able to sell at a
profit or borrow against in the future.
- Your mortgage payments will remain constant for the life of
the mortgage (for a fixed rate mortgage), though not against property
tax or insurance. Rents will most likely increase every year.
- Most of your mortgage payments, in the early years, are
interest. Mortgage interest is a deductible expense on your income taxes.
- Property taxes are also deductible on your income taxes. If
you meet the IRS guidelines, a home office is also a deduction on your income
taxes.
- You will own the property free and clear without any
mortgage payments, usually after 30 years (depending on length or term of the mortgage)
- You often get more living space for less money.
- When you sell your home, there is no tax on $250,000 of
profit ($500,000 if married).
Making the rent vs. buy decision involves a lot more than
simply comparing monthly rent with the monthly mortgage you would pay as a
homeowner. There are pluses and minuses both ways, many of which fall outside
the realm of dollars and cents. The decision of whether to rent or buy is,
ultimately, a very personal one that only you can make. To help you in making
this complicated decision, use the
Rent or
Buy analysis calculator.
Related Links:
Buyer Tips |
More Home Buying Advice
Next -->>
Steps to buying a home
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