should i rent or should i buy?

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Should I Rent Should I Rent Should I Rent or or or Should I Buy? Should I Buy? Should I Buy?

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Renting an apartment or a house works well for young people fresh out of college, just beginning to establish them-selves in life. But there are many disadvantages of renting-and we won't even count the fact that you're throwing your money away! If you've been out in the work force for a while, it's time to take a look at buying.

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Page 1: Should I Rent or Should I Buy?

Should I Rent Should I Rent Should I Rent

ororor

Should I Buy?Should I Buy?Should I Buy?

Page 2: Should I Rent or Should I Buy?

Disadvantages Disadvantages Disadvantages

of of of

RentingRentingRenting

Renting an apartment or a

house works well for young

people fresh out of college, just

beginning to establish them-

selves in life. But there are many

disadvantages of renting-and we

won't even count the fact that

you're throwing your money

away! If you've been out in the

work force for a while, it's time to

take a look at buying.

Page 3: Should I Rent or Should I Buy?

People who rent have no tax

advantages. When you buy a

home, there are many tax credits

for which you become eligible.

They include a deduction for

your mortgage interest, the sales

tax when you buy or improve

your home, and energy credits.

The property taxes you pay to

your state and local municipali-

ties are also deductible. These

Page 4: Should I Rent or Should I Buy?

days, the government has

created stimulus credits that put

money in first-time homeowners'

pockets. If you're still renting,

you're not taking advantage of

any of these.

People who rent never know

when the rent will change. Well,

actually you do know: You can

count on it going up every time

Page 5: Should I Rent or Should I Buy?

your lease renews. With these

tough economic times, there are

few landlords who can resist cost

-of-living increases in rents they

charge. If you own a home, as

long as you choose a fixed-rate

mortgage, your payments will

remain pretty stable. They might

fluctuate a tiny bit from year to

year if tax levies are passed or if

your homeowner's insurance

Page 6: Should I Rent or Should I Buy?

goes up. But basically, you're

looking at a stable amount.

People who rent never have

control over changes in their

homes. What if you want to paint

the kitchen in a bright, kicky

color scheme, but the landlord

says stick to white? What if you

know you could really improve

the logistics of the place by

Page 7: Should I Rent or Should I Buy?

knocking out a wall, or widening

a doorway between two rooms?

Again, you have no real say over

it. Some landlords have been

known to fuss over too many

pictures being hung on the walls.

The truth is, if you're paying to

live there, you should feel that

you can stamp it with your own

personality.

Page 8: Should I Rent or Should I Buy?

People who rent never build

up any equity. This goes beyond

the fact that you will just end up

with a drawer full of payment

coupons while your landlord

reaps all the tax advantages

of ownership. This also includes

any efforts you put into

increasing the livability or value

of the place. What if you really

want a garbage disposal in the

Page 9: Should I Rent or Should I Buy?

kitchen sink? What if you buy

some rose bushes to plant in the

yard? Maybe the landlord will

approve, but you know you won't

be taking it with you when you

leave.

People who rent cannot make

decisions about how they live.

There are too many rules! No

pets. No overnight guests. Your

Page 10: Should I Rent or Should I Buy?

kids must be quiet. No pool. Only

one car, park it in the driveway,

and guess what-you never get to

use the garage. And you can be

assured that however you do live

will be discussed by your land-

lord with every neighbor he

knows on the street.

The truth is that none of these

reasons bothers young people

Page 11: Should I Rent or Should I Buy?

people who are just leaving the

nest. They couldn't care less

about equity or home improve-

ments or tax advantages. What

does it mean if you are becoming

concerned with these issues? It

means you have reached a level

of maturity and commitment, or

a level of financial security, so

that you are ready to take the

step toward home ownership.

Page 12: Should I Rent or Should I Buy?

Five Advantages Five Advantages Five Advantages

of Owning Your of Owning Your of Owning Your

Own HomeOwn HomeOwn Home

It's time to buy your own

home. Your family and friends

are advising it, and you have an

unsettled feeling that your rental

place just does not satisfy. There

are many advantages to owning

your own home, and here are five

of them.

You will own a place that ap-

preciates in value. Yes, it's true,

Page 13: Should I Rent or Should I Buy?

despite the recent real estate

market problems. Remember

that scene in the movie, Gone

With the Wind, when Scarlett

holds up a fistful of earth and

vows that she and her kin will

never go hungry again? Even

though we've gone through a

recent downward spiral of home

values, in general real estate

holds its own very well. If you

Page 14: Should I Rent or Should I Buy?

buy a place now, your payments

will result in a chunk of equity in

future years that you can use

for many purposes.

People who own homes are

eligible for a variety of tax deduc-

tions. First, the year that you

buy your home you can deduct

the sales tax on the home plus

the tax on any points you paid at

Page 15: Should I Rent or Should I Buy?

closing. You'll also find that

energy-efficient home improve-

ments are often tax deductible.

The taxes you pay to your local

municipality and state are tax

deductible. Plus, every year

you'll get a statement from your

lender showing what part of

payments went toward interest

and what part went toward the

principal. The interest payments

Page 16: Should I Rent or Should I Buy?

are tax deductible.

It's possible to borrow on that

equity we talked about in order

to consolidate loans or pay off

big expenditures. In the past,

people could add up the interest

from all their charge card

purchases throughout the year

and deduct it at tax time. That

stopped in the mid-1980s. But if

Page 17: Should I Rent or Should I Buy?

consolidate some high-interest

loans and pay them off with a

home equity loan, the interest

on the home equity loan is tax

deductible.

If you decide to purchase a

home, it's a sign of status within

your community. While there are

many fine people who rent,

there's nothing like the feeling of

Page 18: Should I Rent or Should I Buy?

owning a parcel of land in the

place where you live. It gives you,

your spouse, and your children a

feeling of ties to the community.

If you want to establish a flower

or vegetable garden, you are free

to do so. You might discover a

motivation to become involved in

community activities, especially

since you've chosen a township

that you like and enjoy. And if

Page 19: Should I Rent or Should I Buy?

you do get involved, people will

respect your opinion.

Besides the feeling of stabili-

zation within your community,

you gain financial stabilization.

When you rent, you are subject

to rent increases per your land-

lord's whim. When you buy a

home, you achieve a stable

monthly payment as long as you

Page 20: Should I Rent or Should I Buy?

finance with a fixed-rate mort-

gage. But there's more to it

than that. Your credit score will

go up. It's true that the first year

it might dip a little, because

you've just taken on a huge

responsibility. But as you finish

your first year of on-time pay-

ments your credit score will most

likely go up. This will give you

better interest rates when you

Page 21: Should I Rent or Should I Buy?

apply for a car or other major

loan. Even your insurance rates

will be lower because they are

based in part on a good credit

score.

Welcome to the club!

Page 22: Should I Rent or Should I Buy?

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