Buying vs. Renting a Home

House

Offers the widest variety of living option and remains the preferred housing choice for most people. Available in many sizes and costs - new or old. Homeowner associations becoming more popular to support amenities. Flexible to own but a significant investment.

Renting

Often the least expensive housing option -offers a set monthly expense, has minimal maintenance responsiblity, provides the ability to relocate easily when lease expires.

Escrow

Payment for insurance & Taxes

Rent

Regular payment made by a tenant to an owner for the use of the owner's building or land.

Down payment

Required to protect lender in case of default - usually 20% of house price/loan.

House Payment to Income Ratio

Should not be more than 28% of income

Tenant

Someone who pays rent to use land or a building or a car that is owned by someone else.

Disadvantages of buying a house

Substantial financial commitment, requires a down payment and additional fees such as points and title insurance, living expenses tend to be higher, requires time commitment and work, face the risk of losing money on your investment.

Landlord

The owner of rental property

Advantages of buying a house

*Improved privacy and security over living in an apartment, *Right to remodel or decorate as you please, *Provides a sense of permanency, *Builds equity, *Tax benefits.

Closing costs

Expenses of a property sale that must be paid in addition to the purchase price.

Advantages of Renting

Flexibility, no down payment, no repair or property maintenance costs, wide variety of amenities, more freedom to relocate.

Condominiums

Generally offer similiar amenities to apartment complexes. Difference: condo and coop dwellers generally own their units, owner shares the cost of maintaining common areas through monthly homeowner association fees.

Housing options

House, apartment, condo, townhouse

Disadvantages of Renting

Lack of control over property, lack of privacy, potential delays in property repairs, may be restricted in terms of personal redecoration choices, limitation on pets/children, do not build equity, no tax benefits.