Pros and Cons of Buying an Old House

Pros and cons of buying an old houseOne must be aware of the factors to look for when buying an old house, as it may result in a loss-making proposition. Here are few pros and cons of buying an old house.
Old homes leave buyers super-impressed with their charm, allure, and character. Also, the exclusivity attached to older homes is one feature which attracts many prospective buyers. However, there are certain pros and cons of buying an old house. As the community in which the old house is located is already established, there may not be any new zoning changes. Also, with old houses, you have the benefit of becoming a part of a close-knit and well-established neighborhood, which a new community may lack.

However, you may incur considerable expenses for repairs and refurbishment. Also, there may be certain health and safety concerns which may need your immediate attention. One may also find that there is little or no scope for renovation in an old house. Here are few advantages and disadvantages of buying an old house.

Pros

Architectural Details
Remember that old houses often have intricate woodwork which was crafted or carved out by carpenters manually, as no modern-day carpentry tools were available. Hence, the architectural details in such homes is often unique and irreplaceable. No two homes will be similar in their look and style, unlike new-age homes. If you are someone who thoroughly enjoys aesthetics and architecture, then old houses are definitely meant for you.

Cost-effective
Old houses are relatively cost-effective. This is because you can get more square footage area for a limited price than you would get in the same amount for a new home. It is often observed that old homes are bigger than the new ones, and one may end up getting a better bargain. You may also get a larger yard than a new home.

Return on Investment
Old homes have always enjoyed a good demand in the realty market. As the area is more and the construction sturdy, many people actually prefer to invest in an old home. It also leads to excellent growth of capital. You will be surprised to see how the price of an old home appreciates with time. Even if you put the house on the market, after a few years, you will still be able to get an excellent return on investment because of the rarity quotient.

Central Location
Nowadays, new houses may be located far away from schools, hospitals or supermarkets. Hence, you have to drive through bumper-to-bumper traffic to reach your house in the downtown. However, many old houses are centrally located, and are within walking distance from these vital places. Hence, buying an old house is a wise decision if you have school-going children or aged people in your family, who may require sudden medical attention.

Rich History
If you have bought a Georgian or Victorian home, it will have its own history to tell. The ambiance will simply leave your guests awestruck. Who knows, you may have an interesting story to share about the house. Not only this, but a rich heritage will also help you to gain better prices when you decide to sell the house.

Large Yards
Old houses often have bigger yards. You can utilize this additional space for having a gazebo or swimming pool. Needless to say, if you intend to undertake some creative landscaping, you will have ample space to experiment. Also, if you have pets, they can have enough space to move around.

Cons

Cost of Repairs and Refurbishments
In all probability, if the house is not maintained properly by the old owner, it will mean you will have to shell out more money for repairs and refurbishment. Especially, if your house is situated in a coastal an area, it can lead to rusting of pipes and plumbing. You may also have to check the roof for leakages. Apart from this, peeling color, non-working appliances and systems, etc., will add to the expenses.

Modification Limitations
In a new house, one can decorate the interiors as per his/her taste. However, you do not have this artistic liberty when it comes to an old house as the cabinet, windows, carpets, landscaping, etc., are all present already. If you are to make any drastic changes or undertake renovation, you will have to bear the additional cost.

Health and Safety Concerns
If you are buying an old home, you can be in for some really unpleasant surprises. There is no way to tell if the house is infested with rodents and pests. Also, one cannot determine for sure if the house is lead-/asbestos-/mercury-free. Also, it may not have a fire or burglar alarm, and you will have to install it separately. Also, it may so happen that the electrical wiring and insulation may have aged and is no longer functional. All these situations may pose health and safety hazards.

Root-cause of the Problem
In all probability, the earlier tenants may have planted trees to create a landscape. Roots of older trees often grow farther below the soil, and hamper the plumbing and foundation of the house. You may never be able to detect such problems by looking at a house, it is only when you actually start living there that such issues surface. It will not only mean a hole in the foundation of your old house but also your pocket.

Storage Issues
With the growing consumerism and increase in earnings, we have become serial hoarders or pack-rats. We tend to hang on to clothes that don’t fit us anymore, the gym equipment that we no longer use, travel bags are left gathering dust, etc. All this requires a huge storage space which is not found in old houses. Many times, these houses have sloping roofs, which cause storage problems in the attic, and you may have to get new customized storage options. And if you own three cars, it is pointless to buy an old house which offers a single garage.

Too Small, Too Soon
Even though old houses were built for large families, they do not cater to the need of a modern-day family. You may find that your 60s home is too small even for a family of 4, especially after the kids grow up. With the growing need for a separate living room, study, bedrooms, guest-rooms, kitchen, etc., an old house may seem like it is too cramped up and lacks space.

Undertake an house inspection before buying it so that you get an idea about the required repairs. Unlike a new home, there won’t be a builder’s guarantee. However, you can then ask the owner to either get the maintenance done or pay you for the expenditure. Old houses have steadfastly faced the test of time without giving in to changes in weather or climatic conditions. Now that you know about the pros and cons of buying an old house, hope you will make the right decision.

How to Buy a House Without a Realtor

Learn about some simplistic ways on how to buy a house without a realtor, which will help you save a whole lot of money when buying a new home.
When one buys a new home their first move is to get an agent or realtor to help them with the process of buying a new home, who wraps up the deal and ties up loose ends to make things a breeze for the buyer. It is a recommended choice to make when it comes to buying a new home, since realtors know how it works and what papers are involved, including the legalities that have to be addressed. The only plus point here is that you get to save a whole bunch of money, since the share that realtors take for their services are ludicrously high. There are a lot of people who do their share of research and learn the ropes on how to buy a house without an agent, doing just fine once the deal is closed.

How to Buy a House Without a Real Estate Agent

When it comes to the steps for buying a house, there’s a lot that goes into the initial stages than the later. Go through advertisements and websites for homes in your area or a little away from it according to your preference, that are up for sale. Let the owners be the ones who give you a preview of the house, and not a realtor showing it to you instead. There are important things to look over when you kick-start the process.

Look Up Information on Home Buying
Before you buy a new home, you’d first have to evaluate your expenses and see if you have enough to pay for the house yourself, or if you’ll need a bank loan to begin with. When you save all that extra cash on not hiring a realtor to get the job done, you can use the money instead for something better. Like say maybe paying a heavier down payment so that the mortgage fees on your part when it comes to the monthly payments are much lesser due to the low-interest they will charge you. Get ample research done from others who have homes of their own, and read into it all online about what is involved when getting into home buying.

Check All Documents
I remember when my folks were selling off our house, there was a lot of scurrying about for some ancient document that needed to be found, signed by a man who was just as old, and passed through god knows how many offices. How many times I saw that one lawyer for the paperwork, I’ve lost all count. That is why it is important to know your documents, especially the power of attorney and the likes, because without the necessary papers you’ll be doomed. Buying or selling involves the same papers, so make sure you have it all, and vice verse with the previous owners who will hand over the house and documents to you.

Inspection of the House / Apartment
To know that a house is well worth every penny, you’d have to do an extensive checkup on maintenance costs, availability of running water / electricity, safety in the neighborhood, security personnel if any, cleanliness of the house, furnishings if any, and the likes. Once you tick off these important area that need evaluating, you’re good to go.

Lawyer
You’ll need to hire a lawyer, which is easy since there are places that provide a list of lawyers that will do your job by being paid hourly for their services. This way you save again on finding a lawyer that will dump hefty charges for a whole day or more of paperwork. Make sure you look through the documents handed to you by the owners of the previous apartment or house, and make sure that you understand everything that is being said, to avoid overlooking important details. If you have anything to ask, make it clear to your lawyer to get rid of the possibilities of any loopholes or misleading legal statements. Before you sign the final contract, the papers need to be dealt with right down to every word and period to avoid any future mishaps. Once the closing deal is in place, always make copies of your original documents, while the copies are safely put away should the need come up to present them in any future scenarios. You’re now ready to move into your new home!

Advantages and Disadvantages of Using a Realtor

As much as I’d like to assure you that a situation like yours will work well sans a realtor, there are pros and cons that you must weigh when it comes to not hiring one. Let’s take a look at the ups and downs of such a move and accordingly you can see what works well for you since without a realtor, a lot of home buying settlements have been achieved.

Advantages

Like I said earlier, a lot of money can be saved by not hiring a realtor to do your bidding where ample research can do conducted on how to get the job done without one.
You can have one-on-one interactions with sellers and have all the details of the house conveyed on a firsthand basis, without a realtor blurring the facts.
You can play the role of a realtor by inspecting all the details that need to be covered, with the help of your lawyer.
The only charges you need to worry about besides buying the home, are those that need to be paid to your lawyer and if documents need small fees of any kind for formal / legal processing.

Disadvantages

It is a time-consuming activity to cover all areas of what has to be taken care of during the house buying process.
Important paperwork and other legalities will need to be addressed directly to you, with the burden on your shoulders to run around to see that it has been done or attained.
Certain things will come off as alien, therefore you’ll find yourself stuck in many situations that will have you wishing you hired a realtor.

There are realtors whose services are reasonably priced, where the entire process is taken care of without delaying your need to buy a home. Nonetheless, handling this on your own is still something that is possible, given time and patience. Completing the task at hand without a realtor isn’t an inconceivable idea. Just remember to get help from those who know how the business works from experience, so that you are equipped with knowledge about what is involved.

Buying a House with No Money Down

People, who are interested in buying a house with no money down, may benefit from the following options. It is important to understand the dimensions of the methods undermentioned, before you sign on the dotted line.
Buying a house with no money down was easy before the crash of the housing market. There were a number of sellers, who were more than willing to help an aspiring homeowner purchase a home with virtually no down payment. Then, there were piggyback loans that were provided by the primary mortgage lender, or in some cases, the owner of the property, and if none of these avenues were open, the buyer could always consider purchasing Private Mortgage Insurance. Lease to own is a modified form of seller financing that was also available to people with limited finances. The aforementioned options had their pros and cons.

Piggyback loans were the most popular means of financing amongst cash-strapped people, who were desirous of owning a home without making the requisite down payment. Private Mortgage Insurance (PMI) was next in order of popularity. Seller financing — in case of piggyback loans — also became popular as home prices continued to escalate.

Today, piggyback loans are much harder to come by, although some lenders are still willing to consider Private Mortgage Insurance (PMI). In addition to these options, eligible borrowers can avail zero down VA-insured loans and 100% USDA financing. Buyers, financing through state Housing Finance Agencies and certain non-profits, can use the $8000 tax credit for making the down payment on the secondary financing provided by the aforementioned entities for availing a FHA-insured home loan.

Feasible Methods

► Private Mortgage Insurance
No-money-down homes have been made possible by allowing the borrower to procure a mortgage loan that requires private mortgage insurance as an alternative to the requisite down payment. Typically, the expected down payment is 20-25% of the purchase price of the home. PMI makes it possible for a person to obtain a mortgage loan, without paying a dime by purchasing insurance that protects the mortgage lender in the event of the former defaulting on the loan. Of course, the borrower/aspiring homeowner is required to pay insurance premium on a regular basis.

Although the premium is tax deductible, people often preferred piggyback loans to Private Mortgage Insurance, since the amount of insurance premium was generally more than the interest on piggyback loans. However, today PMI is the best bet for a person, who is keen on buying a house with no money down.

► USDA 100% Financing Program
United States Department of Agriculture (USDA) has a loan guarantee program that is better known as Section 502. The Housing and Urban Development Program (HUD) aids in financing buyers who are purchasing a house or a property for the first time. This program specifically is designed for low-income families so that they may own a property without suffering the grind of down payments. It is meant to provide 100% financing to first-time homeowners and people living in structurally unsound homes to help them purchase a home in the targeted rural areas. The best part about these loans, for people who qualify, is that the borrowers do not have to purchase private mortgage insurance even though the loan is a zero-down mortgage. Moreover, the sellers are allowed to finance up to 6 percent of the purchase price of the property in lieu of closing costs. The rate of interest on the zero down mortgage loan is adjustable.

► VA-insured Loans
The U.S. Department of Veterans Affairs (VA) provides eligible veterans, the facility of buying a home with no money down. These loans are known as VA-insured loans and are meant for all veterans as well as active military personnel in the Army, the Navy, the Marine Corps, the Air Force, the Coast Guard, and the National Guard. The best part about these loans is that the mortgage is a 30-year fixed-rate-level payment obligation. Applicants with less-than-perfect credit are eligible to avail zero-down mortgages that can be used to purchase single-family homes, approved condominiums, and townhouses.

► FHA-insured Loans
Although Federal Housing Administration (FHA) insured loans require 3.5 percent down payment, the first-time home buyers tax credit of $8000 and the subsequent legislation, allowing borrowers to monetize the tax credit and apply it toward their home purchase, has resulted in borrowers being able to buy a home without making the necessary down payment. This is because people financing via state housing finance agencies and non-profits can be assisted by the latter with the amount of down payment on an FHA loan, thus providing ample scope for zero-down mortgage loans.

► House Trading
This is one lucrative way of buying a house with no money down. Active investors swear by the policy of trading properties. When one trades one property for another, the investor is also spared of legalities concerning capital gains — a factor that companions the scenario when a property is sold. This, precisely, is one spot-on pro that selling a property offers. Either it is one large property traded for a syndicate of small properties or skipping their city to buy a house in an all-together new town tagging it their holiday home.

► Leasing with an Option to Buy
Renting a property may be accompanied with an agreement stating the option to buy the said property, as well. Under the terms and conditions of registration mentioned, the lessee and the lessor draw up a negotiable amount that ought to be deposited at stipulated time period in lieu of the property being used. Besides, this agreement also inserts a clause that states the disposition of the lessee to purchase the property formerly leased, at a price set during the lease period.

► Federal Programs
Ad hoc programs are arranged in order to facilitate low-income families to own a house. The Rural Economic and Community Development Administration offers loans with humble interest rates. These programs are deemed pro bono efforts to encourage the underprivileged families to acquire a property of their own.

► Piggyback Loans
Prior to the sub-prime crisis, piggyback loans were the most popular means of financing for a person, who was desirous of owning a home without parting with the requisite amount of down payment. Although, the popularity of these loans has declined on account of these loans shouldering much of the blame for the sub-prime crisis, some mortgage lenders, still may be willing to provide no-money-down mortgages.

As per the guidelines issued by Freddie Mac and Fannie Mae, people, who intend to buy a home by availing a home loan are required to down pay 25% of the purchase price of the home. The remaining amount can be borrowed from a primary mortgage lender. However, the borrower can circumvent the 25% down payment by obtaining a second mortgage simultaneously. In other words, the primary mortgage lender provides a loan for 80% of the purchase price, and the second mortgage lender, the remaining 20%. Here, both mortgages are secured with the same underlying house as collateral. The second mortgage piggybacks on the primary mortgage and carries a much higher rate of interest than the primary mortgage.

Traditionally, piggyback loans were 80-10-10, 80-15-5, or 75-15-10 loans. The first figure from the left indicates the percentage of the purchase price funded by the primary mortgage lender, the second figure is the percentage funded by the second mortgage lender, and the final figure is the borrower’s skin in the game. In time, the final figure was reduced to zero and resulted in no-money-down home loans. Thus, the borrower could easily buy a house with no money down. The second mortgage that piggybacked on the primary mortgage was typically provided by the primary mortgage lender, who gained in terms of higher interest rates than those charged on the primary mortgage. In some cases, the second mortgage was provided by the seller/owner of the house. This brings us to the concept of seller financing.

► Seller Financing
Seller financing often accompanied piggybacked loans, since the second mortgage was either provided by the seller, or by the primary mortgage lender. Seller financing involves transferring the title of the house to the buyer in exchange for a note, and the right to foreclose the property in the event of default. The note is pretty much like a mortgage that is paid off as a balloon payment within a period of 5 to 10 years. Since it is a mortgage, the buyer is expected to pay the seller a hefty interest on the loan. The seller, in turn benefits in the form of a high rate of interest on the loan, in addition to a security interest in the house.

Although 100% seller financing is a thing of the past, it may be possible for an aspiring homeowner to down pay less than 20% and still buy a home, if the seller is desperate to get rid of the house.

In the present scenario, lease contract with option to buy is the best option for people, who are interested in buying a home with minimum down payment. By paying as little as 1 to 5% of the price of the property, the aspiring homeowner can acquire the right to buy the house at an agreed-upon price at some point of time in the future. The aspiring homeowner (lessee) can then rent the house for a period of 3 years or so and pay the amount of the rent to the landlord or the lessor. At the end of this period, the lessee can buy the home from the lessor at the predetermined price or may abstain from exercising the option. Considering the present situation, most sellers are persuading aspiring homeowners to enter into a lease contract with option to buy.

Buying a Foreclosed Home

The pros and cons of buying a foreclosed home should be considered by the buyer before embarking on the same. Besides, one must bear a few tips in mind to strike a genuine deal, when buying a foreclosed home.
In the current scenario, buying a foreclosed home seems like a wonderful investment. A number of economists feel that today, homes are as affordable as they were in 2004. Of course, there is a chance that people may not witness noteworthy appreciation in the price of the property for a long time. Given the state of affairs, a foreclosed home may be good purchase for people, who need a place to stay, rather than people looking at it from an investment perspective. However, aspiring homeowners need to be very cautious while buying a foreclosed home. More so, if the foreclosed property is going to be their first home purchase.

Find the Listings

The internet is the best place to find foreclosure listings. Typically, bank websites and the Housing and Urban Development (HUD) websites have detailed foreclosure listings. People should look for foreclosed homes sold by the Department of Veterans Affairs, Internal Revenue Service, Small Business Administration, U.S. Army Corps of Engineers, Customs, U.S. Marshals Service, Department of Agriculture and Rural Development, Fannie Mae, Freddie Mac, Federal Insurance Deposit Corporation, and General Service Administration. The website of the National Association of Realtors, also has a plethora of information on home foreclosures for sale. Newspapers, too, carry information regarding proposed auctions, the names of the homeowners, and the lenders.

Important Tips

Foreclosed homes are disposed off at auctions held on the steps of the county courthouse. People, who have considerable experience in buying foreclosures, can buy the foreclosed home at this stage. Risk-averse individuals should not buy a home that is being auctioned on account of the following reasons:

☛ The bidders are not allowed to inspect the property before making a bid, although it, certainly is possible that the home may be in need of serious repairs. The successful bidder is expected to make the payment right away and may not have time to inspect the property again. The title deed may be unclear, and there may be additional liens against property that may have to be borne by the buyer. The buyer also has the unsavory task of evicting distraught tenants from the property, and the latter may vandalize the house out of spite before bidding goodbye to a home that was once theirs. House auctions also tend to inflate the price of the property and may end up costing the bidder much more than it, actually is worth. Thus, buying at an auction is not advisable for a novice. Even a seasoned player may find it difficult to navigate the aforementioned risks of buying a foreclosed home at an auction.
☛ If the property is not sold off at an auction, the bank winds up with the deed to the property. The home that is now a part of the bank’s inventory, is referred to as real estate owned (REO). The bank may price the REO at a reasonable figure just to get rid of it. In addition to low cost, there are numerous benefits of buying a foreclosed home from a bank.
☛ The buyer can inspect the house before purchasing it. At times, banks may pay for repairs that are found during preliminary home inspection. Buying a bank foreclosed home is a good deal for the first-time home buyer, since the buyer does not have to concern himself/herself with evicting tenants. The bank also tends to negotiate with other creditors and gets rid of taxes and other liens against property.
☛ A seasoned investor may consider purchasing a tax-lien foreclosure that is the result of the homeowner defaulting on property or income tax. The home, again is sold at an auction, and it may be disposed off for as low as 60% below its market value, since the government is only interested in recovering the taxes.

Finer Points

❒ A mistake that most first-time buyers commit: They do not weigh the pros and cons before buying the property. Majority are lured by the price tag. A lower price does not mean the deal is in your favor. Well, this, precisely is not the real deal. Before you sign on the dotted line, question yourself on a few important variables. Does the house need major repairs; would you be refurbishing the house and renting it in the future; do you have the capital to maintain the house, if you don’t find a tenant to rent the place — these are a few questions that may help you judge your efforts and sort your options better.
❒ Inspecting the house, thoroughly, before you make up your mind to possess the property, is an absolute requirement. If you are planning to buy a foreclosed home in another city, you need to make several trips to the site and recce the place. Asking someone else to do the job for you is a waste of time. It is you, who needs to be proactive and take the final step.
❒ Know that the neighborhood matters. If there have been a number of foreclosed properties in the vicinity of the house you are planning to buy, you may be unable to cope with major repairs as the value of the house itself is deprecated. Besides, learn how the neighborhood looks during the day and the nighttime. The neighborhood that looks lively, however, does not breed hubbub, fetches potential buyers to invest in the property.
❒ Another important variable you must counter-check is the current condition of the house. The present state of the house does matter. It reflects on the degree of refurbishment the house requires and the amount you must shell out for the purpose. Besides the filth and the muck build up, there are various plumbing- and sewage-related problems that set in. Better check, if the pipes are in a good condition; if not, make way for modifications. If the problem is not sorted, there may be complications in the future. Water leaking, courtesy of the cracked pipes, which seeps onto the walls is not a pleasant situation to be in and amending the same after you have rented out the house is not an entertaining idea.
❒ What adds to the house price, is the landscape. Overgrown bushes, unkempt trees with occluded branches lead to depreciation of the property. There are times when overgrown branches gatecrash the spaces, predominantly the windows of the house, and pave the way for deterioration.

Hopefully, the aforementioned tips on buying a foreclosed home will be of use to a buyer, who is keen on buying his/her first home. Price of comparable properties is an important factor that has to be taken into account regardless of whether one buys a REO, a tax-lien foreclosure, or bids at an auction. The absorption rate, or the length of time required to sell the current inventory given the present rate of sales, also needs to be calculated, since a low absorption rate is a bargaining chip for the buyer.

Should You Buy an Apartment or Rent a House?

Buy a house if you are looking for tax benefitsThe decision of buying or renting a house depends on various factors like budget, priority, intention, etc. Moreover, this decision can have far-reaching effects on one’s career and life. If you are confused whether you should buy an apartment or rent a house, then this Buzzle article will guide you about the same.
Number Crunching
The New York Times offers a free online ‘Is It Better to Buy or Rent?’ calculator which will tells you the total cost incurred in buying or renting a place over a span of 30 years. This can give you data that will help you choose the right option for you.
Many people are confused when it comes to buying or renting a house. As this decision can be life-altering, as an individual, it is but natural to be rather unsure. Since each individual’s situation is different, there cannot be one definite answer to such a dilemma. If you want to know what will work for you, consider various scenarios to determine what is applicable for you. For example, if you are still single and do not have a growing family, which needs a permanent house, you can still save money by renting a place.

However, if you want to settle down permanently, in an area that is near to your workplace, or to your kid’s school, it is advisable to invest in a good house. Before making the right decision, you will have to consider the pros and cons of renting vs buying a house. Here is a list of factors that will help you make the right decision.

If you are looking for minimum responsibility
So, you have rented a house on a six-month or one-year lease. Whether it is repairing the roofing, taking care of the water leakage, replacing the floor, or getting a new paint job, if you are a tenant, you don’t have to worry about the expenses at all. On the other hand, if you buy an apartment, as a homeowner, the responsibility of undertaking any kind of repairs and refurbishment lies solely with you. You will have to bear the expenditure as well as find the right people to complete the job.

Preferred Option: Rent
In most cases, your renter’s agreement will clearly state that any kind of major repairs will be borne by the homeowner. Hence, renting is a great option if you are aiming at shouldering minimum responsibility.

If you do not want to opt for a mortgage loan
So you have decided to buy an apartment by applying for a housing loan. Before you begin with the application procedure, spare a moment to go over a few things. Have you considered the amount you may have to pay as down payment, the interest incurred, inspection, processing charges, etc. Needless to say, have you considered the time you will be taking away from your job to complete the lengthy formalities involved in availing and sanctioning of the loan. On the other hand, renting a place will not require you to invest your valuable time and go through scores of paperwork.

Preferred Option: Rent
The amount for the deposit or the rent can be easily afforded every month through your income. Moreover, after the term of lease is over, you get your deposit amount back when you decide to move out. Unlike home buyers who avail mortgage loans, you do not have to worry about repayment of loan over a period of 20 to 30 years.

If you want to capitalize on real-estate investment
As you know, the value of real-estate, in most likelihood, will appreciate over a period of time. For example, assuming you are 25 years old, and you pay an X amount every month as rent, if you pay the same amount in the form of an installment towards your mortgage loans, by the time you reach 50, you will be a proud owner of a real-estate asset. Not to mention, over the years, the value of the property will have appreciated, and you would have carried out a highly profitable real-estate investment.

Preferred Option: Buy
Just imagine, instead of paying rent for 10 years, you would have build an equity in the form of a house. This would not only make you the owner of the property, but also give you the benefit of increased value.

If you want a place of your own
So, the neighbors in your rented apartment raise a huge hue and cry over the number of guests you entertain, or have issues when your children play in the yard. One can often come across such neighbors or homeowners while renting a place. In a sense, your freedom can be jeopardized when it comes to a rented apartment. Whether it is about adopting a pet, playing loud music, having potted plants, hammering on the walls, exercise equipment in the porch; you may have to compromise in certain situations. Hence, it is always better, especially if you have a family, to get a place of your own rather than rent an apartment.

Preferred Option: Buy
Owning a house provides the right environment for the development of growing children. It becomes your legal property or asset. Needless to say, the sense of ownership, security, and freedom that a ‘house of our own’ provides is irreplaceable.

If you want to avail tax benefits

If you own a house, there are several tax benefits which you can avail. If you own a home office, you will be entitled for certain deductions. When you itemize your federal income taxes, you can deduct your property tax as well as the amount of mortgage interest from it. This can help you offset the cost of owning and maintaining a house. Also, under certain conditions, if you sell your home, you will not be charged with ‘capital gains’ tax for the profit earned.

Preferred Option: Buy
You are not subjected to any kind of tax benefits as a tenant, and will not be getting any deductions on your rent amount. Hence, if you own a house, you will definitely be authorized to avail various tax benefits.

If you want to have flexibility in moving out
Suppose you have a job that requires you to travel or relocate on a frequent basis, then you should reconsider buying a house. In most cases, you will not get to live in the house, or will have to sell it before moving to another location. In case you have to move out quickly, you may not find a suitable customer for your house, and may have to settle for a less than deserving sum of money. Also, given the fluctuations in the real-estate market, one cannot be absolutely sure whether retaining and maintaining the property over a period of time will fetch appreciated prices. Hence, if you have a short-term requirement, you should choose to rent rather than buy a house.

Preferred Option: Rent
If your job or situation demands that you travel or relocate, rent is the wise option. There is no point in investing your savings in an expensive asset, like a house, when you will not be utilizing it.

A Quick Overview

Rent a house if you want to…

… build a good credit history by paying your rent on time.

… invest your savings somewhere else.

… avoid owning a depreciating real-estate investment.

Buy a house if you want to…

… permanently settle in a neighborhood.

… avail a FHA loan with a lesser down payment.

… exercise creative control over the house by renovating or refurbishing it.

Needless to say, one of the vital factors which will impact your decision whether to buy an apartment or rent a house, is budget. Unless you have the money to make a down payment, and a credit score to help you avail a loan at affordable interest rates, you will have to rent an apartment. Also, if you and your spouse earn a steady income, you can buy a house by availing a mortgage loan.