| Renting
Renting has advantages for most people at some point in
their lives. This is especially true when you are starting
out on your own as a young, single adult. As we noted above,
renting an apartment involves no responsibility for repairs,
maintenance, and other aspects of home ownership that can
be both costly and time-consuming. Rental complexes may
also provide many of the recreational facilities you would
like, such as a swimming pool and tennis court. Apartments
and other rental units often provide laundry facilities,
which would save you the initial expense of purchasing laundry
equipment.
Another advantage of renting is that it provides more mobility
or flexibility. As a young person, you are more likely to
move rather frequently due to job changes and family changes
(getting married, having children), etc. It is easier to
move quickly when you are renting, because leases for rentals
are easier to get out of than selling a home. A lease is
a contract between the landlord and the tenant indicating
that the tenant has the right to use a particular living
unit for a period of time, such as one year. For this right,
the tenant promises to pay the landlord a specified amount
of rent over the period of time of the rental. Most leases
will allow you to "buy out" of the lease by paying
a penalty (often an additional 1-2 month's rent) if the
lease is not up when you want to move. In some cases, the
landlord will require no additional rent when you move out
early if another renter suitable to the landlord is found
who will assume your lease. Selling a home when you decide
to move is usually a much longer process-taking months and
sometimes years. The length of time depends on a number
of factors including the available supply and demand for
homes in an area and the relative demand for the type of
house that you put on the market. For example, if you own
a two bedroom older home, and that type of house is not
currently popular in your area, your house will likely not
be sold very quickly.
Another major
advantage of renting is that it doesn't require a large
outlay of cash. Most rentals require a security deposit
(usually equal to 2-3 month's rent), but that is much less
than is normally needed for a down payment when buying a
home. Monthly cash costs may also be reduced, as utilities
may be included in your rent payment.
There are, of
course, disadvantages to renting. Some were mentioned in
the section on "housing needs." Can you identify
those? List them here:
A major disadvantage of renting is lack of control over
the property. The owners/managers of the property are responsible
for repairs and general upkeep; if they do not do this well
and promptly, you might be stuck with unpleasant (or even
unsafe) living conditions (from leaking faucets to broken
windows) for some period of time. Property owners can raise
the rent (with proper notice), making your costs higher.
They can also put restrictions on the property, such as
not allowing children or pets, and not permitting you to
do redecorating.
Buying
Mortgage Payment Example:
Cost of Home
(purchase price): $300,000.00
Down Payment:
$25% (many non-conventional loans require less)
Year of Mortgage:
30yr
Interest Rate:
7%
Payment: $1995.91
(This does not include the items below)
Total housing
expense includes:
· Principle & Interest
· Taxes
· Insurance
· Homeowner Fees
· Maintenance
· Homeowner
Fees
Some areas have
homeowner fees, which are not tax deductible. These fees
average around $50 for a neighborhood with some common landscaping,
to around $150 for a gated area with private streets and
a community pool. Beach areas tend to run higher because
the salt air increases the maintenance required.
· Maintenance
· Painting
- $0
· Roofing - $0
· Frozen Water Pipes - $0
· Snow Removal - $0
San Diego's climate
is very mild. There are no freezing problems, or snow blowers
anywhere. No storm windows. Palm tree leaves don't clog
the gutters. In fact, our average rainfall is only 9 inches
per year, so many houses don't even have gutters. It's as
easy as it gets.
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