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Should I Rent

or Should I Buy?


Disadvantages of Renting 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.


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 municipalities are also deductible. These


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


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


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


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.


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


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


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 landlord

with

every

neighbor

he

knows on the street. The truth is that none of these reasons bothers young people


people who are just leaving the nest. They couldn't care less about equity or home improvements 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.


Five Advantages of Owning Your Own 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,


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


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 deductions. 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


closing.

You'll

also

find

that

energy-efficient home improvements 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


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


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


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


you do get involved, people will respect your opinion. Besides the feeling of stabilization within your community, you gain financial stabilization. When you rent, you are subject to rent increases per your landlord's whim. When you buy a home,

you

achieve

a

stable

monthly payment as long as you


finance with a fixed-rate mortgage. 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 payments your credit score will most likely go up. This will give you better interest rates when you


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!


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Should I Rent or Should I Buy?