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Mr. Woodingtons Money Management II Slide 2 Should I Rent or Own? The Tradeoffs of Each Financial Numbers and Considerations Tips Before You Begin The Hunt The Process of House Hunting Slide 3 The choice of where to live is an extremely personal one. This personal decision is influenced by other factors, namely financial limitations The choice to rent or purchase housing boils down to two primary factors: Your Lifestyle Finances (Yours and the world around you) Slide 4 This means all of the following can come into consideration when making a housing decision: Personal and financial goals Personal values, needs, and wants Amount of money available for housing costs Financial resources and readiness Credit history Real estate prices/Mortgage rates Location preference Expected length of stay in particular place Slide 5 If you decide to rent you will enjoy the following advantages: Location choice Less responsibilities (maintenance, repairs, general upkeep) Extra amenities However with these advantages come certain tradeoffs, including: Subject to terms of a lease, rules of the community Less privacy and transient neighbors No equity (Equity = The value of something less the amount still owed from purchasing it) Slide 6 Advantages of purchasing a home include: Pride of ownership Builds equity over time/Tax breaks Much more freedom and flexibility for customizations However, in return for these advantages you must sacrifice the following: Larger costs, both initially, reoccurring &long term Initial costs = Down payment, closing costs Reoccurring = Taxes, general maintenance Long term = Major maintenance issues (Ex: New Roof) Time and energy commitment Slide 7 Housing is the largest personal expenditure, accounting for almost 1/3 of a persons net income Understand your other expenses, based upon your lifestyle, by creating and adhering to a budget When purchasing a home you should aim to place a minimum of 10-20% of the homes purchase price as a down payment The purchase price of a home should not exceed 2 times the annual household income Slide 8 Understand what youre getting yourself into Review your needs and goals, not just for now but for the future as well Review your credit Build a professional team Agent (Preferably Buyer Exclusive) Home Inspector Get pre-approved for a loan Set your limit, trade-up as time goes on Slide 9 As you are looking for a home to purchase, remember the following: Visit the area at multiple times during the day Get a home inspection, review and understand the report Do your homework! Research schools Crime in the area How much are other homes selling for? Slide 10 Choosing to rent or purchase a place to live is a highly personal decision. The two main factors to consider are lifestyle and finances. There are tradeoffs that come with your decision, both when choosing to rent or own and when selecting the actual residence. Be sure to take your time and do your research when making this important decision!