SHOULD I BUY OR RENT (Part 3)

In the previous two editions of this blog I have shared information endeavoring to help the reader decide between two options - buy or rent.  This edition will conclude with some final thoughts on the matter and provide you will a link to help you decide which your best option is. 

It is not always good to ask a question to answer a question, but here goes - "What an average U.S. citizen prefers?"

According to studies Americans prefer to rent a place.  The rental market is the highest since 1965 but about 1/3 of those polled replied that renting was a matter of their choice; while 65% claim they rent due to life circumstances and financial issues.  The poll did reveal that a majority of the respondents were planning on buying a house.

There are a few cities that are great for both buying and renting.  A short, but by no means inclusive, list would include the following cities: Wichita, KS; Huntsville, AL; Atlanta, GA; Charlotte, NC; and Tucson, AZ.  

Some things to consider when renting:

 1. The renter should know what the lease can and cannot do before signing.
 2. The renter should know how to protect their security deposit. 
 3. The renter should know obtain a renter's insurance policy to protect against losses due to flooding, fires and robbery.

Some things to consider when buying:

 1. The buyer's financial responsibility extends beyond just the mortgage.  There are also taxes, insurance, maintenance and repairs.
 2. The homeowner has less flexibility to move.
 3. The market and home prices fluctuate.  The property may not appreciated at a rate the homeowner anticipated leaving the homeowner with no profit when planning to sell it.

The final decision is always yours!  You are familiar with your own finances and ability to handle a mortgage.  

Here is a link to NerdWallet.  They have a calculator that may provide the answer you need. 

nerdwallet.com/mortgages/rent-vs-buy-calculator

Happy hunting!

SHOULD I BUY OR RENT? (PART 2)

Last week we explored some of the financial advantages of renting.  Today we shall look at the financial advantages of buying.

Buying a home is by far the single biggest investment an individual or family will make. What are the advantages of buying in both the short and long term?

1. Buying gives ownership and control of the property.  Your home is an asset, while your mortgage is a liability.

2. Buying builds equity.  Equity is the difference between the market value of the home and what you owe.  You can utilize the equity to remodel your home, pay college tuition, or even provide a vacation for your family.

3. Buying gives you a tax benefit - you can deduct your mortgage interest and property tax payment.  Also you can deduct the capital gains from selling the house from taxable income if you maintained the property two of the last five years.

4. You can improve your home any way you want.  Remodeling, renovation and decorating are within your control.  

5. The buyer experiences fewer restrictions, unless you live in a deed restricted community or are subject to Home Owners Association rules.  

6. The homeowner can achieve a better credit rating through timely mortgage payments. 

Okay, there you are.  The advantages of buying a home as opposed to renting.  But before you decide one way or the other, let's pause and ask an important question - "Which route is best for me - buy or rent - and my current financial situation?" 

That is a topic for another week...see you then.

SHOULD I BUY OR RENT? (Part 1)

SHOULD I BUY OR RENT is a timeless question that deserves some discussion.  There is no perfect answer; however, it is one worth exploring.  Over the next three weeks this blog will present pros and cons of both then you can weigh in with your thoughts.

History proves that families either build their own homes or rent from someone else.  The need for shelter is a primary human need.  So it begs the question why buy when I can rent?

There are several financial advantages to renting.

1. Few, if any, maintenance costs or repair bills.  When renting the burden of property maintenance is the landlords.   

2. Do not have real estate taxes.  

3. Do not have to pay a big down payment.  Although you may have to pay a deposit fee it is much less than a down payment on a home.

4. Renters may be able to budget easier as rent cost is set at signing the lease.

5. Relocation is easier and the cost to move is lower.

6. Access to amenities that may not be available if you are a homeowner.  

Reading over the list you may be ready to cast your vote in favor of renting, but let's look next at the advantages of buying a home.  We'll do just that in week's blog.

"THE DOCTOR WILL SEE YOU NOW."

When was the last time you visited your primary care physician?  If you are like me it is usually twice a year he and I get together.  

Let me ask you this, "When was the last time you met with the insurance agent who wrote your homeowners insurance policy?"  It has probably been some time.  Better yet, when was the last time your read through you homeowners insurance policy.  

Do you know what level of protection you have or if you have adequate coverage for the improvements you have made to your home?  Do I have the protection I need before I have a reason to use it?

Here are a few quick questions you need to ask your insurance agent.

1. If my home is damaged, does my policy cover the actual cash value or just replacement cost?

2. Does my homeowners policy cover my personal jewelry, objects of art, wine collection or rare book collection?

3. Am I covered regardless of the reason my home is damaged?

4. Are there specific endorsements on my current policy?

5. Am I covered should someone be injured in my home?

6. How can I reduce my monthly premium?

7. Which costs less to insure - a new house or an old house - should I decide to move?

8. Is is true that all home policies are basically the same?

9. What is the procedure for filing a claim and how long should I anticipate until I receive my claim payment?

10. What can I do to assist in the claim process and make it easier to collect on a claim?

Contact your insurance agent at least two months prior to the policy renewal date to discuss your current level of coverage, any inclusion you need to make to your property inventory, or any endorsements you need to add or delete.