Mortgage Industry Experience .pdf
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Renting VS. Buying
US Mortgage Corporation (NMLS ID#3901). Corporate Office is located at 201 Old Country Road, Suite 140, Melville, NY 11747; (631) 580-2600 or
(800) 562-6715 (LOANS15).
Branch Office: (NMLS ID#875077) 200 Lakeside Drive, Suite 270, Horsham, PA 19044. Residential Mortgage Lender License-New Jersey Department
of Banking and Insurance and Licensed Lender-Pennsylvania Department of Banking. Rates, fees and program guidelines are subject to change
without notice. Certain restrictions may apply. Some loans arranged through third parties. First mortgages only. Not all products and/or programs
are available in all states. This document is not intended as an offer to extend credit nor a commitment to lend.
Table Of Contents
The Perks Of Owning A Home . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 01
The Pitfalls Of Purchasing A Home . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 03
The Reasons To Rent A Home . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 05
The Downside Of Renting A H ome . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 07
The Perks Of Owning A Home
A first-time buyer should know both sides of a coin before making a decision about
purchasing a home. Buying a home has its own pitfalls but the perks are worth making the
choice. The rising real estate prices can intimidate first time home-buyers; however, the
pros outweigh the cons.
You Are The Owner
The pride from ownership is unbeatable. For most first-time buyers, investing in a home
will be the first substantial transaction they make in their lives. You can have a sense of
satisfaction of achieving a goal in life and having invested in your future.
A home-owner has his share of worries including payment on mortgage and property
taxes. It is a relief that the government deducts these payments from the state and federal
income taxes. You will end up paying mortgage interest every month for a few years after
purchasing your home. This interest might be considered as a government subsidy and be
excluded from your income tax. You can also get tax exemption on the expenses involved
in the loan application process, closing costs on your home purchase, etc.
While living in a speculative economy, it is safe to say that the real estate prices will keep
escalating for at least a few years. Home investment is like investing in stocks and shares.
As you keep paying back the mortgage loan you took out for the purchase, the value and
price of your home keeps rising. Consider that you buy a home for $100,000 this year and
every year the price goes up by at least 7 percent. In a long term, your home will cost more
than what you paid for it. It is a good way to invest in a home. You can flip it for a profit
when the price escalates or you can accumulate your investments in a safe way.
Exclusion From Capital Gains
You can get exclusion from capital gains of $250,000 per individual if you own a home for
more than two years. You can sell your house every two years and make a profit from the
price appreciation without being subject to taxes up to the specified limit.
Along with the price appreciation, the equity builds over time. Equity is the market value of
the property you own. Equity and appreciation accompany each other. When you invest in
a home, it becomes a part of your assets that keep increasing in value with time. You will
be able to leverage the value of your home to take out home equity loans. Equity loans
carry lower interest rates which are beneficial to those homeowners who wish to make
Buy One And More
You can buy more homes or make improvements to your existing home by getting a
second mortgage loan from your lender. A lender will be happy to assist you with a second
mortgage loan when you make regular monthly payments on the first. When you make
your mortgage payments, you also earn equity value on your property. This way, you not
only buy property, but also accumulate equity value with time.
Security And Stability
You have read many times that real estate prices are not going to decline in the near
future. You can avoid the ever-increasing rent payments by just investing in a home that
you can own and live in for any number of years regardless of the real estate prices. You
will also feel secure about having a place to stay permanently. Contemplate on these
benefits to make a choice on buying or renting a home.
The Pitfalls Of Purchasing A Home
Owning a home is like making a long-time commitment. The amount of work that
goes into the investment and buying process is tremendous and may not be worth
it in the present real estate scenario.
Committed And Cannot Escape
When you get a mortgage loan for purchasing a home, you are obliged to make
your loan payments every month whether you can support your living or not. If you
have to move to another city or state, you cannot sell the house until you finish
repaying your debt. If you have purchased a home with a partner and you have
relationship troubles, you can break away from the relationship with your partner,
but the both of you may be stuck with responsibilities toward the home. It is a longterm commitment and you have no choice but to stick to it.
Know About Foreclosure
If you default on your mortgage payments or file bankruptcy, your lender can
foreclose your home. It means that the lender will take possession of your house
and sell it to redeem the balance amount that you have to repay. If you continue
to live in the house for a while following the foreclosure, it is likely that you will be
evicted from the property.
Increasing Home Expenses
Your expenses do not stop once you have invested in a home. Every month
you will have to spend for the maintenance of your home, bills, taxes, and
more costs. You will have to shell out money on repairs every time there is a
broken faucet or a window. So, consider the pros and cons of home-buying before you
make your purchase.
The Reasons To Rent A Home
Renting a home is a smart way of spending your money. Like buying, renting also has its
own perks that can sometimes outweigh the benefits of purchasing a home. The costs are
quite less and you can always find homes that suit your lifestyle and your finances. It has
many advantages; a few are listed below.
Cost-Effective Way Of Life
It is easier to pay for rent than invest in a home purchase. Since the prices are increasing,
the rent price escalation will be relatively lesser than that of the prices for home purchase.
You can find a rented home for any range that you look for without having to worry about
credit report, mortgage loan approval, mortgage payments, and the rest of the worries
related to home purchases.
When you purchase a house, you are obligated to make mortgage payments every
month and spend money on maintenance and repairs. While you rent a home, you are
financially flexible and are not bound to any of those obligations. The rent payments
and expenses for your lifestyle will be your only concern.
Live Your Dream
You may not be able to afford a home when prices are high. For example, you may
not be able to buy a home on the beach, but there is no reason why you cannot rent
it. Renting provides you with many opportunities in the kinds of home you would like to
live in. You can choose to live in luxurious homes when your finances can support you
or in adequately furnished good homes when you are low on cash. If you are frequently
traveling between places, renting is a good option since you do not have to worry about
selling your house or sub-letting it. You can also choose to live in apartments or gated
communities with gyms and pools, not having to worry about membership expenses.
Let The Owner Repair
You need not worry about the maintenance costs of the house. If you need anything
fixed, the landlord will get it done. You do not have to spend on painting, carpentry,
plumbing, or any other work to be done on the home. Renting a home comes like
a package. As long as you pay the rent, your landlord will take care of the home
Your rent money will be a fixed amount that will mostly include the electricity bill and the
water bill. You need not worry about increasing expenses for the bill separately, for that
will be taken care of by your owner.
Freedom To Move
Is your landlord annoying? Does your neighbor play loud music at night? If anything
is not right with your home, you have the freedom to move out and look for another.
You might have to give a short notice of a week or a month before you vacate. In some
cases, landlords will take a year’s advance from renters to ensure they stay for at least
a year before they vacate.
No Tax Headaches
A renter does not have to pay taxes like a homeowner. You might have to pay income
taxes but anything to do with property liens, estate tax, etc., will be taken care of by the
owner. In addition to this, you can get insurance for your rented apartment for a lower
premium amount while compared to that of homeowners.