Evan Vitale

Evan Vitale – Rent or Buy? (Part II)

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By Evan Vitale

This is the second in a two-part series on renting or buying your own home.

Just like renting a home, buying your own house has some advantages and disadvantages as well.

Advantages of buying a house:

  • The biggest advantage is that your monthly payment builds equity (ownership). The longer you own your house, the more equity you build. Equity is like cash. You can borrow against it, refinance your home in order to earn a better interest rate. It’s also a return on your original purchase should you decide to sell your home someday.
  • Another big advantage are the tax deductions you can receive.
  • Should you ever decide to change the interior or exterior of your home, there’s no need to check in with the landlord. You’re the owner!
  • Owning your house offers pride. People love to say they own their house.

Disadvantage of buying a house:

  • It’s an investment. The housing market has seen trends go up and down. Where will the trend be when you decide to sell your house? Will you be getting a good return on your investment?
  • You may not like the neighborhood. If you’re single and the neighborhood is family-oriented, you may feel like you don’t fit in with couples and children. It’s an adjustment you’ll have to handle.
  • Maintenance and repair problems are your problems. You won’t be able to call the landlord when the furnace isn’t working or the roof starts leaking. Make sure you are able to handle unexpected homeowner expenses.

Which one is right for you? It all depends on your income, career plans, etc. Talk to your family. Ask your banker, talk to a realtor friend, do some research and collect information. Don’t rush into any long-term situations without feeling 100% secure with your decision.

Evan Vitale – Rent or Buy? (Part I)

by

By Evan Vitale

This is the first in a two-part series on renting or buying your own home.

Buying and owning your own house has been the “American Dream” slogan for many generations. However, there are many disadvantages and advantages of owning your own home vs. renting a home, condo or apartment.

It all depends on your current and future financial situation, so let’s first take a look at the advantages and disadvantages of renting your own home.

Advantages of Renting

  • One of the biggest advantages to renting is lower upfront costs. Instead of a hefty down payment on a home (inspections, closing costs, etc.), renters may only have to pay a security deposit or perhaps the first and last month’s rent. If you are renting at an apartment complex, you might be able to find a renter’s special where the security deposit waived or the first month is free if you sign a long-term lease.
  • If your job or career changes, it’s much easier to pull up stakes and move if you are a renter as compared to being a homeowner.
  • If you have poor credit, renting gives you the opportunity to rebuild and improve your credit score, which makes it easier when it comes to purchasing a home at a later time.
  • By renting, you have extremely low maintenance costs as furnace repairs; a leaky roof and plumbing problems are taken care of by the landlord (check your lease for details).

Disadvantages of Renting

  • It may not be a huge deal to some, but renters usually aren’t allowed to paint walls or make any major changes to the house or unit without prior consent.
  • You must follow the rules in the lease and you must also make sure you can get along with your landlord. Just as the landlord can check your references, you should also consider checking the landlord’s references as well. A tenant-landlord relationship is a two-way street.
  • After the initial term of the lease (usually 12 months), the landlord could opt to increase your rent for the next term. Be prepared for any rent increases. Can you afford an increase or do you have to move again?
  • Your monthly rent is an expense, so you don’t build any equity in your property. When you own a house, part of your payment goes into building equity (value) that you can borrow against some day.

In our next blog, we’ll take a look at the advantages and disadvantages of buying your own house.