Nevada City Virtual Tour

Saturday, March 22, 2014

Rent vs. Own Facts

Rent Advantages
  • Fewer (if any) maintenance costs
  • No down payment required (less deposit)
  • No real estate taxes (renters insurance optional)
  • Less stress (who cares, it’s not yours!)
  • Freedom to move or downsize when necessary
  • No risk of home price depreciation
  • Can’t be foreclosed on
Rent Disadvantages
  • Rental payment may exceed monthly cost of mortgage
  • No ownership or wealth creation
  • Payments never stop when renting
  • Rent will rise over time
  • Must deal with a landlord or management company
  • No tax benefits
  • Rules, regulations, and limitations
  • More temporary, less stability
  • Always at the mercy of the property owner
  • Pets may not be allowed
Ownership Advantages
  • You can build home equity and wealth
  • Status- Status-Status
  • Sizable tax deductions possible
  • Your space, your rules (pets welcome)
  • Ability to remodel, expand, tear down
  • Pride of ownership (social status, accomplishment)
  • Potentially better for children, family structure
  • Mortgage can improve your credit history/score
  • Ability to borrow against your home (HELOC or cash-out)
  • No more monthly payments once mortgage paid off
  • Fixed payments (if you choose a fixed mortgage)
  • Mortgages are the cheapest loans available
  • No landlord
  • Can exclude capital gains when you sell (partially)
  • Inflation hedge
  • Can rent out to others
  • Can sell and use proceeds for bigger/better home
  • Retirement nest egg
  • It’s the American Dream!

Ownership Disadvantages
  • Home prices may lose value
  • Obtaining a mortgage (and finding a home) is a hassle
  • Not everyone qualifies for a mortgage
  • You must pay taxes and homeowners insurance
  • Sizable down payment necessary
  • Maintenance costs can be excessive
  • You’re “stuck” in a home (long-term commitment)
  • Increased liability and responsibility
  • Transactional costs of buying and selling
  • Taxes and insurance generally rise
  • Can be foreclosed on and lose your home

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