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Sunday, December 28, 2008

Renting vs Buying

Should you rent or buy?

There are many benefits for renting.

1. If you new to an area and unfamiliar with the area.Moreover,you still haven't made up your mind what kind and features of house do you want for staying in long-term.It make sense to rent a house rather than rushing into buying one.For apartments or condominiums renting,Some people prefer their maintenance and repairs handled by the management to reduce headache.Home ownership entails responsibility and can be hard on the budget especially with large unforeseen repairs.Renting an apartment is a good choice for you.Most problems and can go directly to the landlord or management. Apartment renting allows you to spend your free time doing what you want rather than taking care of the lawn, pest control, pool maintenance and other repairs.Apartments usually have facilities like swimming pool,gym,table tennis room,hall and etc.Renting one can give you enough time to plan what do you really want to buy.

How can I set a realistic budget when buying my first home?

Setting a realistic budget is significant.Sometimes first time home buyer underestimate the cost of buying a house.With the checklist below,it would help alot.

1. Mortgage, property taxes, insurance and PMI or private mortgage insurance. Even if you have a fixed rate mortgage, your property taxes and insurance will likely continue to increase each and every year. Do plan ahead.

2. Cable,electricity,Internet, trash collection and water. One of the benefits of renting is that many apartments include trash collection, basic cable, Internet and water in the price of the monthly rent. Once you buy a home all of those bills will be sent individually. Call local service providers in advance to determine what you will pay for services in the area.

3. Tools and Appliances. Renting an apartment provides services like laundry,security ,maintenance and repairs too. You can save your money from buying a washing machine,lawn mower, dryer, basic tools, leaf or snow blower, and other yard maintenance tools when buying your first home.

4. Pool and Fitness Center. Many apartments provide swimming pool and fitness facilities (gym) free to residents which open from morning until night.Some apartments even have sauna or spa services for massage and slimming too.

5. Security. Most of the apartments provides securities too .almost every spot of aparments such as the lift or carpark are equipped with CCTV for security purposes.Besides there are security guards to look after the apartments day and night.

How to calculate cost of home ownership?

For first time home buyer, use the following checklist to calculate your personal affordability and desirability index.

1. When visiting online search engines.Use the convenient mortgage calculators to get an estimate of the monthly mortgage payment. Notice, the terms might change depending upon your down payment, duration of loan and interest payments.

2. In addition to the mortgage payment, buying a home entails PMI or private mortgage insurance if you don't put at least 20 percent down on the property. To get a rough estimate of PMI approximate 01 percent or .05 percent to .10 percent of your monthly payment.

3. Homeowners insurance and property taxes. Call and get estimates from at least three insurance brokers in your area to find out how much insurance will cost. Don't assume you will pay what the former owners pay for insurance. Your credit rating and other factors can influence your insurance premiums.

4. Maintenance and Repairs. Decide in advance if you will be doing it yourself or hiring others. Many people who are familiar with renting a condo or apartment are not used to spending their weekends or evenings mowing the lawn or cleaning the pool. Plan on budgeting approximately 10 percent of the total cost of your home each year towards maintenance and repairs. You won't use it all at once: Some years will require only a few small repairs or maintenance items, but other years you may eventually need to replace a roof or make large repairs to AC/Heat units.

What help is available for buying a home?

Home buying help comes in many forms. First-time home buyers can increase their odds of successfully buying a home by following these quick tips:

1. Deal with a reputable real estate agent. Real estate is a complex transaction where a mistake can literally cost you thousands upon thousands of dollars. Take time to find an agent that will answer your questions and work with you. Find an agent that specializes in the location you are considering purchasing.

2. Get pre-qualified. Avoid unpleasant credit surprises and find out what you will be able to afford. Don't automatically assume you can afford what the bank will approve you for ... that is the maximum! Instead, take your own situation into account when deciding what you can comfortably afford for the long term. For instance, if you are planning to start a family in the next several years and would like the option of remaining home with the children then set your own spending limits when it comes to purchasing a home.

3. Ask your real estate agent about local first time home-buyer programs in your area. There are federal, state and local programs available in different areas of the nation specifically designated for first time home buyers. Some assist with the down payment where others allow you to help build the home in exchange for a reduction in price. Still others have special low interest rates for first-time home buyers. Your local real estate agent will know what is available in your area to make buying a home a reality!

How long does home maintenance require?

One of the biggest surprises first-time home buyers face is how much extra time it takes! If you have been renting an apartment, then chances are the landlord or property manager takes care of routine maintenance and small repairs. You might be surprised to find out how much time and money you will spend on small things you have taken for granted. Use these quick tips to see how buying a home will impact your budget and schedule:

1. Take one weekend to do the yard for a friend or family that owns their own home. This will give you an idea of how long it will take you to mow the lawn, trim the hedges, blow leaves or snow and other routine tasks. Planting, trimming trees and other seasonal or yearly projects take even longer.

2. Price having lawn and pool maintenance done for your or go to the local home improvement center to price the cost of lawn mowers, weeders, blowers and other tools.

3. Consider the time and cost required for pool or spa maintenance, landscaping, painting, window cleaning and other annual projects. Don't forget pest control and recycling/garbage collection.

When To Rent Rather than Buy?

Renting and buying both got its own benefits.There are questions that you can ask your self before making decision.

Do you intend to remain in the same location for more tan five years?or you would like to change location due to your job or other reasons?

Do you enjoy home maintenance, lawn care and other household tasks?

Do you desire the privacy and ability to do what you want with your own property?

Do you enjoy all the facilities provided and handled by others?

While home ownership does allow additional freedom there are often deed restrictions, zoning, Home owners associations and other restrictions on what you can do with a given property. Understand what you are buying in advance to make sure it meets your needs.

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