To Rent or To Buy??

Great words of wisdom for any one trying to decide:
  
                             Rent or Buy?

Buying and renting both have their ups and down, but one is proven to make your money go further. Buying a home is almost always the better choice, if you’re ready to take on a mortgage and all of the other costs that come with home ownership, that is. But, before you shy away and sign that 12-month lease, consider what you could be getting and saving by buying a home instead. Here are 10 advantages of buying a home versus renting:

Build Equity: A major advantage to buying a home over renting is the ability to build equity over years of ownership. You build equity as your home value increases and you can leverage this value to take out lines of credit. Tenants don’t receive equity when renting because they don’t own their house.
Ownership: One of the biggest advantages of buying a home versus renting is the ability to own. Ownership gives you the right to upgrade your home, rent it out to tenants, sell it and do as you please. Buying a home is one of the most important and valuable investments a person can make.
Make Upgrades: A major advantage of buying a home is having the ability to make upgrades and improvements that will increase its value and give it more curb appeal. Owning a home gives you the right to decorate, renovate and remodel as you please to make your home look just how you want it. Renting limits your ability to personalize your home because most landlords won’t allow their tenants to paint the walls, replace fixtures and appliances or make
any major changes.
Lock In Payments: When you buy a home, you secure a monthly payment that you will pay for the rest of the time you own the home. If your finances suddenly change and you need to scale back on your monthly expenses, you have the option of refinancing your mortgage to reduce your monthly payment. This does come with some risks and you may have to face higher interest payments, but it’s a nice option to have when money’s tight. Tenants have less control of their payments because rent can increase from lease to lease.
Increase Line of Credit: Buying a home increases your line of credit and can improve your score in more ways than renting. Homeowners with an increased line of credit will have a higher credit limit and get low interest rates on credit cards and loans. Renting limits your credit-building opportunities and doesn’t make quite as big of a splash as having a mortgage in your name.
Make a Profit: Whether you’re a business-savvy homeowner who’s looking to make a quick profit from flipping a house, or a homeowner who’s wanting to sell their house after it increased in value, you have the ability to make a profit when you own a home. When renting, you never make a profit because you don’t own the property.
Payments Eventually End: A major advantage of buying a home versus renting is the simple fact that mortgage payments will eventually end one day. It usually takes about 15 to 30 years to completely pay off your house and own it for good. When renting, the payments just keep coming and they don’t end like a mortgage.
Home Value Increases: After years of owning a home, its value increases. Depending on the neighborhood, schools and other property values, purchased homes generally appreciate in value throughout the years, making them more and more profitable. For many homeowners, their home is worth much more than what they bought it for. Renting doesn’t allow you to make a profit because you don’t own your home.
No Landlords: When you buy a home, you no longer have to deal with pesky landlords. Having the freedom to run your house the way you want it and taking all tasks into your own hands is actually a rewarding responsibility.
Emotional Satisfaction: Homeowners feel greater emotional satisfaction from having a piece of property in their name and investing their time and money toward something as important as a house. This is especially true for first time homebuyers. Renters may experience some emotional satisfaction and pride in renting, but not nearly as much as homeowners.

(courtesy David King, Long & Foster, Reston, VA.....great agent in Reston!)

Rent To Own

Rent to Own : Bain or Blessing

With the Housing Market being touted as in "Worst Slump in 10 Years", numerous buyers and sellers have been asking about the Rent-to-Own concept. Though many Realtors know the market is sound and only returning to "normal' from the torrid rate of the late 90's and first five years of the new millennium, the Media's comparative lingo doesn't realize that sales remain above levels seen at the beginning of that 10 year "wonder years of real estate".

Regardless, the question on Rent to Own has arisen. Rent-to-Own contracts or Land Contracts(often also called Installment Contract) have been around for decades and are not a new form of ownership. One of the misconceptions of Rent-to-Own relates to ownership.

The purchaser/tenant frequently feels that the property is under contract and that he/she has only delayed the final settlement to a later date due to any one of a number of circumstances(saving closing costs, finding a down payment, etc). In reality, during the rental segment of the transaction, the purchaser is actually a tenant with the rights and responsibility of any tenant.
Occasionally, the seller/landlord may provide more rights for property improvements and redecorating than a normal lease agreement would but seldom is it in the tenant/purchaser's benefit.

This relationship is stated in Land Contracts due to typical lengthy definition of the terms and conditions during the leasehold(rental) period but can be not directly noted so that the novice home purchaser will understand this difference. This where a sound Real Estate counselor can help.

In Rent-To-Own/Land Contracts, there are three basic parts:

1. Option
2. Leasehold terms
3. Final Sales Price and terms

In the Option section, the seller/landlord asks for and the buyer/tenant agrees to provide "X"
dollars to seller/landlord for the right to hold an option to purchase the home at a later date.

In the Leasehold terms, the seller/landlord details the rental terms and monthly rent is manner
similar to any lease agreement. One needs to pay particularly close attention to this section
should part of the rent apply to closing costs or being "saved" for a future down payment.
In cases that moneys from the rent will apply to closing costs or down payment, the buyer
tenant must ensure mechanisms are in place to account for the savings that should be
happening.

In the Final Sales Price and Terms, the seller/landlord details the final sales price and terms
of the sale(i.e. home inspections, termite, etc).

You will note a frequent reference to the "seller/landlord details" so that you wander what the buyer/tenant's input is. Typically, this input is limited to the buyer's/tenant's desire to live at the address that is being rented/sold.

This is typically true as the Seller would love to sell the property out right but is considering rent-to-own as a means to lock in a buyer. Yet, the Seller has alot of downside on the Buyer's possession and renting for a lenghty period. What if:

a. Buyer skips town after 4 months
b. Buyer fails to take care of property then wants to walk away from deal
c. Buyer begins to find lots of faults with property and seeks to cancel contract

And these are only to name of few.

Obvious the Buyer has numerous concerns about the Seller's future action(i.e. never puts "extra on rent" towards closing costs savings. Yet, the truth be known, the Seller is in control as he has the house that he can wait for a better qualified buyer or buyer/tenant. Secondly, the typical individual seeking rent-t0-own has limited funds or banged up credit and couldn't buy a home if the Seller wasn't willing to rent the property for later purchase. As a result, the Seller assumes a lot of risk with an underfunded buyer or one that historically hasn't handled paying bills well.

Thus, on Rent-to-Own, BUYERS BEWARE!!!