Should I Rent or Should I Buy?

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Renting an apartment or a house works well for young people fresh out of college, just beginning to establish them-selves in life. But there are many disadvantages of renting-and we won't even count …

Renting an apartment or a house works well for young people fresh out of college, just beginning to establish them-selves in life. But there are many disadvantages of renting-and we won't even count the fact that you're throwing your money away! If you've been out in the work force for a while, it's time to take a look at buying.

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  • 1. Should I Rent or Should I Buy?
  • 2. Disadvantages of Renting Renting an apartment or ahouse works well for youngpeople fresh out of college, justbeginning to establish them-selves in life. But there are manydisadvantages of renting-and wewont even count the fact thatyoure throwing your moneyaway! If youve been out in thework force for a while, its time totake a look at buying.
  • 3. People who rent have no taxadvantages. When you buy ahome, there are many tax creditsfor which you become eligible.They include a deduction foryour mortgage interest, the salestax when you buy or improveyour home, and energy credits.The property taxes you pay toyour state and local municipali-ties are also deductible. These
  • 4. days, the government hascreated stimulus credits that putmoney in first-time homeownerspockets. If youre still renting,youre not taking advantage ofany of these. People who rent never knowwhen the rent will change. Well,actually you do know: You cancount on it going up every time
  • 5. your lease renews. With thesetough economic times, there arefew landlords who can resist cost-of-living increases in rents theycharge. If you own a home, aslong as you choose a fixed-ratemortgage, your payments willremain pretty stable. They mightfluctuate a tiny bit from year toyear if tax levies are passed or ifyour homeowners insurance
  • 6. goes up. But basically, yourelooking at a stable amount. People who rent never havecontrol over changes in theirhomes. What if you want to paintthe kitchen in a bright, kickycolor scheme, but the landlordsays stick to white? What if youknow you could really improvethe logistics of the place by
  • 7. knocking out a wall, or wideninga doorway between two rooms?Again, you have no real say overit. Some landlords have beenknown to fuss over too manypictures being hung on the walls.The truth is, if youre paying tolive there, you should feel thatyou can stamp it with your ownpersonality.
  • 8. People who rent never buildup any equity. This goes beyondthe fact that you will just end upwith a drawer full of paymentcoupons while your landlordreaps all the tax advantagesof ownership. This also includesany efforts you put intoincreasing the livability or valueof the place. What if you reallywant a garbage disposal in the
  • 9. kitchen sink? What if you buysome rose bushes to plant in theyard? Maybe the landlord willapprove, but you know you wontbe taking it with you when youleave. People who rent cannot makedecisions about how they live.There are too many rules! Nopets. No overnight guests. Your
  • 10. kids must be quiet. No pool. Onlyone car, park it in the driveway,and guess what-you never get touse the garage. And you can beassured that however you do livewill be discussed by your land-lord with every neighbor heknows on the street. The truth is that none of thesereasons bothers young people
  • 11. people who are just leaving thenest. They couldnt care lessabout equity or home improve-ments or tax advantages. Whatdoes it mean if you are becomingconcerned with these issues? Itmeans you have reached a levelof maturity and commitment, ora level of financial security, sothat you are ready to take thestep toward home ownership.
  • 12. Five Advantages of Owning Your Own Home Its time to buy your ownhome. Your family and friendsare advising it, and you have anunsettled feeling that your rentalplace just does not satisfy. Thereare many advantages to owningyour own home, and here are fiveof them. You will own a place that ap-preciates in value. Yes, its true,
  • 13. despite the recent real estatemarket problems. Rememberthat scene in the movie, GoneWith the Wind, when Scarlettholds up a fistful of earth andvows that she and her kin willnever go hungry again? Eventhough weve gone through arecent downward spiral of homevalues, in general real estateholds its own very well. If you
  • 14. buy a place now, your paymentswill result in a chunk of equity infuture years that you can usefor many purposes. People who own homes areeligible for a variety of tax deduc-tions. First, the year that youbuy your home you can deductthe sales tax on the home plusthe tax on any points you paid at
  • 15. closing. Youll also find thatenergy-efficient home improve-ments are often tax deductible.The taxes you pay to your localmunicipality and state are taxdeductible. Plus, every yearyoull get a statement from yourlender showing what part ofpayments went toward interestand what part went toward theprincipal. The interest payments
  • 16. are tax deductible. Its possible to borrow on thatequity we talked about in orderto consolidate loans or pay offbig expenditures. In the past,people could add up the interestfrom all their charge cardpurchases throughout the yearand deduct it at tax time. Thatstopped in the mid-1980s. But if
  • 17. consolidate some high-interestloans and pay them off with ahome equity loan, the intereston the home equity loan is taxdeductible. If you decide to purchase ahome, its a sign of status withinyour community. While there aremany fine people who rent,theres nothing like the feeling of
  • 18. owning a parcel of land in theplace where you live. It gives you,your spouse, and your children afeeling of ties to the community.If you want to establish a floweror vegetable garden, you are freeto do so. You might discover amotivation to become involved incommunity activities, especiallysince youve chosen a townshipthat you like and enjoy. And if
  • 19. you do get involved, people willrespect your opinion. Besides the feeling of stabili-zation within your community,you gain financial stabilization.When you rent, you are subjectto rent increases per your land-lords whim. When you buy ahome, you achieve a stablemonthly payment as long as you
  • 20. finance with a fixed-rate mort-gage. But theres more to itthan that. Your credit score willgo up. Its true that the first yearit might dip a little, becauseyouve just taken on a hugeresponsibility. But as you finishyour first year of on-time pay-ments your credit score will mostlikely go up. This will give youbetter interest rates when you
  • 21. apply for a car or other majorloan. Even your insurance rateswill be lower because they arebased in part on a good creditscore. Welcome to the club!
  • 22. Denver RealEstate Want to Buy a Home? Colorado Real EstateAutomated Home Finder is the sourcefor all of your real estate and homebuying needs. By combining the mostadvanced search tools with the top realestate agents in the industry, we giveyou the competitive advantage to reachyour home buying and real estate goals.