Renting Versus Owning

                Buying a home is 45% Cheaper Than Renting
      The most important housing decision that most consumers face is whether to rent or buy. So, to help them with this decision, I took a look at the key market factors affecting homeownership.   First off, asking home prices have started to rebound, and have risen by 2.3%. However, rents have risen by 4.7%. This means that prices are lower relative to rents than they were a year ago. More importantly, mortgage rates have fallen.  Based on asking prices and rents during 2012 buying is now 45% cheaper than renting in the 100 largest US metros. By Jed Kolko Chief Economist for Trulia.com  
            56 Considerations if you’re thinking of buying versus renting……

Rent Advantages

          May be cheaper than a mortgage payment

               Fewer (if any) maintenance costs

           No down payment is 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

           Some utility bills may be included

          “Free” amenities such as pool, gym, security

           Money can be used for other, more profitable investments

           Can’t be foreclosed on

Rent Disadvantages

           Rental payments may exceed the 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 are welcomed

             Ability to remodel, expand tear down

             Pride of ownership

             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 the 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

          Could overpay for your property

          Obtaining a mortgage (and finding a home) is a hassle

          Not everyone qualifies for a mortgage

          You must pay taxes and homeowners insurance

          Total housing payments can be more expensive

          A mortgage payment can rise (if an ARM)

          A sizable down payment is necessary

          Maintenance costs can be excessive

          Pricey HOA dues (if applicable)

          You’re “stuck” in a home (long-term commitment)

          Increased liability and responsibility

          Transactional costs of buying and selling

          Ownership is stressful!

          Taxes and insurance generally rise

          Your home can be damaged or destroyed (and not fully insured)  

           Can be foreclosed on and lose your home