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Financially Fit

Buying Vs. Renting


Are you looking for a new place to live? Maybe you’re family is growing and you need more space, or maybe you are graduating this spring and are ready to start life on your own. Either way, you probably have questions about whether to rent or buy. One is not necessarily better that the other. It is more of a situational factor, depending on what is important to you. The list below goes through some of the pros and cons of both renting and buying to help you make the right choice for you.


The advantages

BUILD EQUITY OVER TIME- Every dollar paid toward a mortgages principal represents equity. When you reach 20% equity you have the ability to refinance your mortgage to secure a lower interest rate or longer repayment.

TAX BENEFITS- Federal Tax Deductions: As a home owner, you can likely deduct your property taxes and interest paid on your mortgage, reducing your overall taxes.

CREATIVE FREEDOM- As a homeowner, you make the call on updates you wish to see throughout your home. You can paint walls, update kitchen, or finish your basement.

The disadvantages

HIGH UPFRONT COSTS- You can expect to pay no less than 5.5% of your home’s value before moving in.
POTENTIAL FOR FINANCIAL LOSS- Although homeownership builds equity over time, home values can still decrease or remain flat.

RESPONSIBILITY FOR MAINTENANCE AND REPAIRS- As a homeowner, you’re responsible for covering the costs of all uninsured maintenance and repair work on your home.


The advantages

NO RESPONSIBILITY FOR MAINTENANCE OR REPAIRS- As a renter, you’re not responsible for home maintenance or repair costs. If a toilet backs up, an appliance stops working, or a pipe bursts, you just have to call your landlord.

SOME UTILITIES MAY BE INCLUDED- In many multi-unit apartments, some or all utilities, such as water, gas, electric, internet, and cable are included with your rent.

CREDIT REQUIREMENTS ARE LESS STRICT- Renting is much easier than securing a mortgage loan and a good mortgage rate. Most landlords will rent to you even if your credit score is low.

The disadvantages

NO EQUITY BUILDING- As a renter, every dollar you pay in rent is gone forever; you can’t build equity. For this reason, if you plan to stay in the same area for more than a few years, buying may be a smarter financial choice.

NO TAX BENEFITS- Renters aren’t eligible for any housing-related federal tax credits or deductions.
If you are leaning towards buying as the best option for you and your family, stop into CES to see what we can offer you in terms of mortgages. Loans are subject to credit approval.
Federally insured by NCUA.

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