Renting vs. Owning Show

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Renting vs. Owning Show

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Renting vs. Owning Show

  1. 1. Renting vs. Owning<br />
  2. 2. Introduction<br />Housing Is the Largest Expenditure<br /><ul><li>About 1/3 of a person’s income</li></ul>Places to Live<br /><ul><li>House, Apartment, Condo, Duplex, Mobile Home, etc.</li></ul> Two Options<br /><ul><li>Rent
  3. 3. Own</li></li></ul><li>Renting Terminology<br />Rent<br /><ul><li>The cost of using someone else’s property</li></ul>Tenant (Renter)<br /><ul><li>The person who rents the property </li></ul>Landlord<br /><ul><li>Owner of the rental property</li></li></ul><li>Why Rent<br />Can’t Afford a Home<br />Short-term Housing Option<br />Do Not Want to Own Home<br />
  4. 4. Advantages of Renting<br />Less Expensive<br /><ul><li>No down payment
  5. 5. Cheaper monthly payment</li></ul>Fixed monthly expenses<br />Shorter commitment<br />Little maintenance or repair work<br />Extra amenities<br />Utilities may be included<br />
  6. 6. Disadvantages of Renting<br />Subject To Lease Term<br />Rent may change with little notice<br />Less privacy and transient neighbors<br />Restrictions on noise level <br />Fewer decorating options<br />No equity<br />No tax deductions<br />Property could be sold<br />No Pets<br />
  7. 7. Home Ownership Terminology<br />Home ownership <br /><ul><li>Buyer has purchased a housing unit as property</li></ul>Equity<br /><ul><li>Current market value of a home minus the outstanding mortgage balance </li></ul>Down payment<br /><ul><li>Amount of money paid on the home at time of purchase
  8. 8. 10 – 20% of the purchase price of the home</li></ul>Collateral<br /><ul><li> Item promised to the lender if the borrower does not pay back the loan
  9. 9. Usually the home</li></li></ul><li>Home Buying Facts<br />Mortgage<br /><ul><li>Home loan
  10. 10. 90% of buyers take out a mortgage</li></ul>Largest financial decision<br />Recommended purchase price<br /><ul><li>2 ½ times their annual household income</li></li></ul><li>Advantages of Ownership<br />Build Equity<br /><ul><li> Use as collateral for other purchases</li></ul>Pride of ownership<br />More privacy<br />Larger living space and storage<br />Improve credit rating<br />Investment <br />Free to make home improvements<br /> Pets<br />Income tax deductions<br />
  11. 11. Disadvantages of Ownership<br />Large down payment<br />Move-in costs<br />Insurance costs<br />Commitment—time, money, and energy<br />Repair and maintenance costs<br />Property taxes can raise substantially<br />Money is tied up in the home<br />Relocate—sell time unknown<br />Possible for property to decrease in value<br />
  12. 12. Reasons for Making a Housing Choice<br />$$<br />Personal and financial goals<br />Personal values, needs, and wants<br />Credit history<br />Real estate prices<br />Location preference<br />Expected length of stay in particular place<br />
  13. 13. Costs of Renting<br />Monthly rent<br />Security deposit<br /><ul><li>Advance payment to cover anything beyond normal wear and tear on the unit</li></ul>Utilities<br /><ul><li>Electricity, Gas, Water, Trash Pick- up, etc.</li></ul>Renter’s insurance (optional)<br />
  14. 14. Costs of Ownership<br />Monthly mortgage payments <br />Down payment (one time cost)<br />Closing costs (one time cost)<br />Utilities <br /><ul><li> electricity, water, garbage, etc.</li></ul>Homeowner’s insurance<br />Real estate property taxes<br />Maintenance <br />

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