Renter - Being a renter has a few benefits. However, the benefits of homeownership well outweigh the benefits of renting. With being a renter you are usually signing a lease or rental agreement to live in a certain place for a 6 month or 12 month period of time. This can sometimes even be broken for relocation or other extenuating circumstances. Also, you can sometimes get someone to sublease the place if you no longer want to live there. Being a homeowner, you will usually have to sell your home before moving and get the home ready to sell. Normally, you do not have to do too much if any maintenance or fixing up of the rental place you live in.When you rent, you are not building any equity. Your home can act as your largest savings account that you have. Once you are a homeowner, you are able to build equity through paying down the principal of your loan, and the appreciation of your home's value. The equity can then be used to make home improvements (possibly building more equity), making a major purchase, paying off credit cards, or any other thing that you may see fit to use your equity on.
A major disadvantage to renting is that you are generally not able to 'customize' your home. You can't paint walls or make any significant changes to your home unless it's approved by the owner. Most people like to make their home more livable by changing things to fit their unique tastes.
Renting is advantageous if your job requires that you move often due to frequent promotions and/or frequent transfers.
When you rent a home you most likely cannot write off the interest paid on the property. However if it is a renters market, you may be able to save more money with a lower monthly payment for the same type of home as compared to tax benifits of ownership.
Remember, when you buy, you can have a fixed housing payment for the life of the loan, usually 30 years.
When you rent your housing payment will usually go up each time you sign a new lease, averaging about a 3% increase annually.
Rental Property - Many people dabble into real estate investing, or at some time or another think about purchasing rental properties. There are many things that need to be considered when looking to buy rental properties. One thing you should know is that qualifying for investment property financing is usually a little tougher than qualifying for the property that you plan to live in.
You will also want to develop a business plan for an investment purchase to make sure that you do not get in trouble financially. You need to budget any profit you make from that property for repairs and routine maintanence. Many a real estate investors fail due to lack of planning.
When qualifying for a rental property mortgage loan you normally will not be able to use 100% of the rent that you collect. For qualification purposes, most lenders only credit 75% of the rent collected. This is to allow for vacancies that will occur in the rental property.
It will be important to consult with your accountant professional to review any tax benefits that come with a rental property. Possible tax advantages can possibly include, improvements, repairs and even vacancy.
If you already have rental proptery a lender may ask to see copies of the rental agreemtents you already have.
Rent to Own Home - Rent to Own allow a part of your rent each month to go towards the down payment and/or purchase of your home. Before getting into a contract on the home, you should get with a mortgage broker and let him/her run your credit and to make sure you can you get a loan in a years time and what do you need to do to make it happen.
When you are renting to own a home it is extremely important to keep documentation and proof of your monthly rent payments. Don't pay in cash. If you don't have a checking account, pay your monthly payment with a money order. Make it a priority to have documented and proof of your monthly payments.
If you enter into a land contract most lenders will treat this as a refinance and may even allow you to take cash out when you refinance the home into your name.
Depending upon the lender you will need at least 12 months of cancelled checks to get into a cashout refinance loan based upon the annual appraised value as opposed to the stated value in the option section.
