Owning Vs. Renting |
Housing is the largest expense... Approximately 1/3 of a person's budget is spent on housing. |
Reasons for making housing
DECISIONS include:
OwningHome Ownership - the buyer has purchased a housing unit as property
Equity - owning a home is an investment because if a person sells a house for more than what it was bought for, the person makes money Collateral - is an item promised to the lender if the borrower does not pay back the loan, usually the home Co$ts of Owning a house1. monthly mortgage payments
2. down payments 3. closing costs 4. utilities 5. homeowner’s insurance 6. real estate property taxes 7. maintenance ADVANTAGES: pride of ownership, more room and storage, feel more comfortable, have privacy, there is potential that your property will rise in value
DISADVANTAGES: large down payment, insurance costs, money is tied up in the house, time, money and time commitment |
RentingLease — is a legal contract between the tenant and the landlord, specifying the responsibilities and rights of both parties
Landlord — owner of the rental property, may perform management duties Tenant — the renter, the person who rents the property Rent — the cost of using someone else’s property Security Deposit — an advance payment to cover anything beyond normal wear and tear on the unit Co$ts of Renting a house/apartment1. monthly rent
2. security deposit 3. utilities 4. renter’s insurance ADVANTAGES: low move-in costs, easy to move, fewer responsibilities, location choices, fixed monthly expenses
DISADVANTAGES: subject to terms of lease, rent may change with little notice, no tax deductions |