Renting vs. Buying

Pros and Cons

Costs

Renting: Pros and Cons

• Renting: paying money to live in a

dwelling owned by someone else

• Landlord – owner

• Tenants – renters

Advantages of Renting

• Predictable housing costs –

• Monthly rent is consistent

• Do not need to worry about repair/maintenance bills

• Limited maintenance –

• Yard work, snow removal, painting, and repairs are generally the responsibility of the landlord

• Mobility –

• Ability to move frequently (month-to-month, 6 month, 12 months leases)

Disadvantages of Renting

• Limited control and freedom –

• Little to no control about how building is maintained

• Need permission to make décor changes (painting, wallpaper, etc.)

• May limit or prohibit pets

• Lack of permanence –

• Have the ability to move in and out frequently – neighbors feel like strangers

• Financial –

• Money spent on rent does not go towards an investment

• Rent may increase after the initial lease terms end

Buying: Pros and Cons

Advantages of Home Ownership

• Feeling of belonging –

• Stable location with sense of community

• Independence –

• May have to comply with SOME regulations

• Free to adapt their homes to meet their needs

• Remodeling and redecorating is their personal choice

• Investment value –

• Money is not “lost” – exchanging forms of wealth (real estate vs. cash)

• Home values OFTEN rise

Advantages of Home Ownership

• Good credit record –

• Can help owners build good credit (but CAN negatively impact credit score if regular

payments are not made)

• Tax advantages –

• Income tax savings (interest is tax-deductible – can be deducted from income when filling out

taxes)

• Property tax is also deductible

Disadvantages of Home Ownership

• Unexpected expenses –

• Examples: water heater replacement, roof leaks, broken appliances, etc.

• Time spend on maintenance

• Examples: snow removal, lawn care, painting

• Limited mobility –

• Long-term investment – can be costly to sell a home shortly after purchasing (usually want to

live in owned home for 1 year minimum)

A Closer Look at Costs

• Renters Costs

• Buyers Costs

Renter’s Initial Costs

• Application Fee

• Credit Check Fee

• Security Deposit

• Pet Deposit (if pets in home)

• Advance of Rent (occasionally)

• Moving Costs

• Movers, truck, boxes, etc.

Renter’s Continual Costs

• Rent

• Renter’s Insurance

• Utilities

• Parking

Buyer’s Initial Costs

• Earnest Money (deposit paid to show interest/seriousness of purchase)

• Application Fee

• Credit Check Fee

• Inspection Fees

• Down Payment (5-25% of house cost)

• Closing Costs Moving Costs

• Movers, truck, boxes, etc

Buyer’s Continual Costs

• Mortgage Payment (15-30 years)

• Property Taxes

• Homeowner’s Insurance

• Utilities

• Maintenance

Selecting Rental Housing (pg. 150-157)

Tenant Rights and Responsibilities (pg. 158-159)

Understanding Financing (pg. 170-172)

Deciding What to Look For (pg. 173-176)

The Home Buying Process (pg. 178-185)

YOUR TURN!